The circular flow of income for a two-sector model shows _____

• the flow of income between the households, firms and government

• the flow of income for the government

• the flow of income from government to households and firms

• the flow of income between the households and firms

A four-sector economy also known as a

• closed economy

• simple economy

• open economy

• modern economy

Gross Domestic Products (GDP) measures

• the market value of intermediate products produced during the year

• the sum of the market value of both final and intermediate products produced during the year

• the sum of the market value of final products produced and imported during the year

• the market value of final products produced in the nation during the year

The total market value of all final goods and services produced by the residents of a country during a given period of time is the

• Gross National Product (GNP)

• Gross Domestic Product (GDP)

• Net National Income

• Net National Product

The difference between GDP and GNP is

• subsidy

• indirect tax

• depreciation

• net property income from abroad

The concept of value added solves the double counting problems in the calculation of national income by using the

• income appoach

• aggregate approach

• product approach

• product and income approach

To obtain the value of Gross National Product at factor cost (GNPfc) grom Gross National Product at market price (GNPmp), we need to

• add depreciation and minus subsidies

• add indirect taxes and minus subsidies

• add transfer payment and minus depreciation

• add subsidies and minus indirect taxes

If net factor income from abroad is positive,

• Gross National Product is greater than Gross Domestic Product

• National Income less than personal income

• Gross National Product is less than personal income

• Gross National Product is less than Gross Domestic Product

The main factor that differentiates Gross National Product from National Product is

• net investment

• gross investment

• capital consumption

• net factor income abroad

When there is inflation, _________

• real GDP increases faster than GDP

• GDP increases faster than real GDP

• GDP and real GDP increases at the same time

• there is no way of telling whether GDP or real GDP increases faster