Economics Chapter 2 Test

The government's spending less than it receives is known as a budget deficit.

Consumption expenditures are a business's payments for capital to make its product.

Governments should discourage profit making as it leads to greed and waste.

Discouraging entrepreneurship can seriously damage a nation's economy.

Households and business firms are the elements most basic to the circular flow model.

Ludwig von Mises is well-known for exploring the economic practice of

Which of the following would an economist not consider an example of land?

Which of the following is not an example of capital?

Which of the following does not qualify as a possible factor cost?

What is an example of dissaving?

Models provide entirely accurate predictions of economic outcomes.

From whom do businesses ultimately receive the factors of production?

The financial market includes all institutions that receive deposits from households and lend to business

In the circular flow model, government refers primarily to which level of government?

On a PPC graph, any point on the graphed line represents

Factor costs refer to all the resources necessary to create goods and services.

What circulates money as the "heart" of the economy?

Dissaving occurs whenever a household withdraws money from an account.

Economic models are used mainly for instruction and prediction.

Any point outside the line on a PPC graph indicates that the business has overreached its resources.

Which of the following is a transfer payment?

What is the chief advantage of the line graph over the schedule?

Ludwig von Mises was best known for his study of financial entrepreneurship.

What are the two basic elements of the circular flow model?

What is the most important factor of production?

The public sector refers to which part of the circular flow model?

The circular flow model is a tool of microeconomics.

Financial markets primarily funnel money from the government to households.