1. If the selling price of a product is $10, the average total cost is $8, and total sales are 5,000 units, the total profit will be
A) $5,000
B) $8,000
C) $10,000
D) $20,000
2. The total payment of resource income in the economy is equal to the total value of the output.
True or False
3. A balanced federal budget tends to have a neutral effect on the economy.
True or False
4. In the simple circular flow model, if planned I exceeds planned S, then
A) the economy is not at equilibrium
B) the size of the circular flow is increasing
C) if the economy is at full employment, then prices will rise
D) all of the above
5. The expansionary effect of a high government budget deficit can be offset by the contractionary effect of a surplus in the nation’s balance of trade.
True or False
6. The level of total output and the price level can be affected by changes in consumption.
True or False
7. If the economy is at less than full employment and exports exceed imports (while other planned injections equal other planned leakages), the economy
A) remains stable
B) expands
C) contracts
D) has falling prices
8. The operation of the total economy can best be demonstrated by a
A) merry-go-round
B) circular flow
C) Ferris wheel
D) roller coaster