An example of a leakage in the circular flow model is A. domestic spending for i

Question

An example of a leakage in the circular flow model is

A.domestic spending for imports

B.foreign spending on exports

C.consumer spending on goods and services

D.business borrowing to invest

E.none of the above

An example of an injection in the circular flow model is

A. taxes

B.spending for imports

C. government purchases

D.savings

E.none of the above

Unemployment that is a result of a wage above the equilibrium wage rate is

A.an example of a price ceiling

B. a market clearing wage rate

C. a shortage of workers

D. a surplus of workers

E. none of the above

Name the four components of monetary policy that the Federal Reserve System can do to combat inflation.

Name the four components of monetary policy that the Federal Reserve System can do to combat unemployment/recession.

Explanation / Answer

1. An example of a leakage in the circular flow model is:

    A.domestic spending for imports

2. An example of an injection in the circular flow model is:

    C. government purchases

3. Unemployment that is a result of a wage above the equilibrium wage rate is:

    D. a surplus of workers

4. Four components of monetary policy that the Federal Reserve System can do to combat inflation are:

    Open Market Operations

    The Discount Rate

   Reserve Requirements

     Interest on Reserves

Here, Federal Reserve System use contractionary monetary policy

5. Four components of monetary policy that the Federal Reserve System can do to combat unemployment/recession.

   Open Market Operations

    The Discount Rate

   Reserve Requirements

     Interest on Reserves

Here, Federal Reserve System use expansionary monetary policy

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