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31) Which of the following statements is true about profits?

A) Profits are excluded from the circular flow of the income diagram.

B) The only portion of profits that are included in the circular flow diagram are the portion paid out in the form of dividends.

C) Profits are considered one of the resources necessary for production.

D) Profits are considered a cost of doing business.

32) Total income is defined as

A) the total receipts of firms before taxes.

B) the total amount earned by all resource owners.

C) the sum of the total receipts of firms and the amount earned by households.

D) the sum of the total receipts of firms less the amount of tax that must be paid.

33) All of the following are incomes earned in the factor market EXCEPT

A) wages.

B) prices of goods and services.

C) profits.

D) rents.

34) The annual cost of producing the entire output of goods and services in the economy

A) includes financial transactions.

B) can be calculated entirely on the basis of financial transactions.

C) includes durable goods but excludes nondurable goods.

D) is total income.

35) Households receive their income in the circular flow diagram by

A) selling the use of their property.

B) selling the goods they produce at home.

C) obtaining dividends and interest payments.

D) selling resources they own to business firms.

36) In the simple circular flow model, the funds received by a carmaker when it sells a car goes to

A) the workers who helped build the car.

B) the owners of firms who sold materials to the carmaker, and the rest stays with the firm.

C) only the owners of the carmaker.

D) the owners of all of the resources used to make the car.

37) Which of the following is NOT a final good or service?

A) an automobile

B) bread

C) flour

D) a cookie

38) Refer to the above figure. The top two arrows of the figure refer to the product markets. The bottom arrows refer to the factor markets. Which arrow represents the total monetary value of all goods and services?

A) Arrow A

B) Arrow B

C) Arrow C

D) Arrow D

39) Refer to the above figure.  The top two arrows of the figure refer to the product markets. The bottom arrows refer to the factor markets. Which arrow represents the final consumer goods and services?

A) Arrow A

B) Arrow B

C) Arrow C

D) Arrow D

40) Refer to the above figure. The top two arrows of the figure refer to the product markets. The bottom arrows refer to the factor markets. Which arrow represents factor services?

A) Arrow A

B) Arrow B

C) Arrow C

D) Arrow D

41) Refer to the above figure. The top two arrows of the figure refer to the product markets. The bottom arrows refer to the factor markets. Which arrow represents total income?

A) Arrow A

B) Arrow B

C) Arrow C

D) Arrow D

42) Refer to the above figure. Which arrows represent items that are measured in dollar terms?

A) Arrows A and B

B) Arrows C and D

C) Arrows A and D

D) Arrows B and C

43) Refer to the above figure. Which arrows represent items that are not measured in dollar terms?

A) Arrows A and B

B) Arrows C and D

C) Arrows A and D

D) Arrows B and C

 

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