If the supply of labor ________, real wages fall and the amount ...

[student77]

If the supply of labor ________, real wages fall and the amount of labor employed ________.
 
  A) increases; increases B) increases; decreases
  C) decreases; increases D) decreases; decreases

Question 2

What is a circular flow diagram?
 
  What will be an ideal response?

[reversalruiz]

Answer to Question 1

A

Answer to Question 2

Economists have designed a system of national accounts that measures GDP in four equivalent ways - production, expenditure, income, and factors. The circular flow diagram provides a simple visual way of remembering the relationships among these four equivalent systems. Firms on the left produce goods and services (production). Households on the right pay to buy those goods and services (expenditure). Firms pay households to use households' capital and labor (income). Capital and labor are put to use by firms (factors of production). The accounting system is set up so that all four sets of flows are equal in value.

[student77]

Gracias!

[zacnyjessica]

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