1. In the circular flow model with government, what is the role of government in
ID: 2440696 • Letter: 1
Question
1. In the circular flow model with government, what is the role of government in the resource market?
a) buyer b) seller c) both d) none
2. The addition of government to the circular flow model illustrates that government:
a) purchases resources in the resource market
b) purchases goods in the product market
c) provides public goods and services to businesses and households
d) does all of these
3. Which of the following is an advantage of property rights?
a) eliminates shortage
b) encourages equality
c) leads to innovations
d) all the above
Explanation / Answer
1) Resource market is the market where labor servies are hired. Government is a buyer in the resource market where it hires employees and pays them wages to produce goods and services. (Select buyer)
2) Option D. While government buys goods and services in product market, it also supplies the same to households and hires employees to produce them
3) Option D. Property rights ensure efficient allocation of resources where market shortages, exploitation and other problems are resolved.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.