1. The circular flow diagram implies that if accounting is donecorrectly, _______.

A) the flow of expenditure must equal the income of thehouseholds making those expenditures.

B) the flow of expenditure must exceed the income of thehouseholds making those expenditures.

C) the flow of income must exceed the implied value of thefactors of production

D) the implied value of the factors of production must exceedthe flow of income

2. Total efficiency units of labor is :

A) obtained by dividing the total capital stock of the economyby the total number of workers.

B) obtained by dividing the total number of workers in theeconomy by the average efficiency of each worker.

C) obtained by multiplying the total number of workers in theeconomy b the average efficiency of each worker.

D) obtained by multiplying the total population of the economyby the average amount of capital available to each worker.

3. A shoe retailer does give a bill for shoes purchased from hisstore and does not report his income correctly to evade taxes.

If you pay him $50, ________.

A) the GDP of your country will fall

B) the GDP of your country will increase

C) the GDP of your country will remain unchanged

D) the trade surplus of your country will increase.

4. John is a U.S. citizen who bought a house in Canada. Thispurchase will lead to a _______.

A) increase in the GDP of Canada. B) decreases in the GDP ofU.S. C) decrease in the GDP of Canada D) increase in the GDP ofU.S.