The operation of an economy

Which of the following refers to scientific knowledge used to more efficiently combine factors of production into higher value-added products for consumers?

• Enterprise

• Technology

• Human capital

• Capital goods

Which of the following is not an assumption about exchange that economists make?

• People are self-interested

• People are typically rational

• People typically know their preferences

• Exchanges only affect the two parties to the transaction

Which of the following will make the distribution of goods and services more equitable?

• Cutting education spending

• Reducing welfare payments

• Providing free dental care

• Removing the price cap on university education

Which type of income is earned by a young entrepreneur selling firewood to local households during the winter?

• Rent

• Wages

• Interest

• Profit

Answer explanation

Explanation: https://edrolo.com.au/s/2897904/

How much have house prices increased in real terms if their nominal growth was 15% and inflation was 3%?

• 18%

• 12%

• 15%

• 3%

Answer explanation

Explanation: https://edrolo.com.au/s/2897905/

Which of the following government policies is not likely to lead to improvements in quality of life?

• Policies to maintain employment

• Investment in infrastructure

• Reductions in subsidies for dental care

• Policies to promote economic growth

Answer explanation

Explanation: https://edrolo.com.au/s/2897906/

Which of the following is not one of the five sectors in the circular flow model?

• International

• Financial

• Government

• Private

What is the missing word in the two sector circular flow model image?

• Effort

• Work

• Resources

• Labour

If income is greater than expenditure in the three sector circular flow model, which of the following is correct?

• Savings are present in the economy

• Households are borrowing

• Leakages = injections

• Investment cannot occur

Answer explanation

Explanation: https://edrolo.com.au/s/2897908/

In the four sector circular flow model, if savings exceeds investment, and the economy is in equilibrium, which of the following can be concluded?

• Expenditure fell

• Government spending exceeds taxation

• Taxation exceeds government spending

• This economy cannot be in equilibrium

Answer explanation

Explanation: https://edrolo.com.au/s/2897909/