Circular Flow, Multiplier, and GDP calculations

An entrepreneur is a person who —

• takes the risk of production to earn a profit
• enforces government regulations for business
• manages financial investments
• sets the interest rates at banks

In the circular flow model, what do individuals SELL to businesses

• Services
• Money
• Resources
• D Goods

 Governments use tax revenue from individuals and businesses to provide —

• profits to buy more resources
• income to purchase products
• for business expansion and increased consumption
• public goods and services

If there is an initial injection (e.g. a rise in exports) into the economy then the final increase in aggregate demand and real GDP will be greater. This reflects 

• economic growth 
• the multiplier 
• keynesian economic policy 
• accelerator 

The proportion of any change in income that is spent rather than saved 

• the multiplier 
• income determinants 
• marginal propensity to consume 
• macroeconomic equilibrium

The rate of interest represents the cost of credit and the opportunity cost of savings.  

• T
• F

If the nominal interest rate is 7 percent and the inflation rate is 5 percent, the real interest rate is 12 percent

• T
• F

the greater the leakages the smaller the multiplier effect 

• T
• F

Investment is the most stable component of GDP

• T
• F

The equation for the multiplier is:

• 1/MPC
• 1/1+MPC
• 1/MPS
• 1/1-MPS