Circular Flow

According to the diagram showing the circular flow of goods and resources, where do businesses sell the goods and services they produce?

B) in the product market

Money that individuals receive from businesses return to businesses in

B) the product markets.

How do individuals contribute to the circular flow of economic activity?

C) Individuals provide labor for factor markets and buy goods in product markets.

The diagram shows the circular flow of goods and resources. What is the primary purpose of this chart?

C) It shows how households and businesses interact in a market economy.

What is meant by the statement "money is a medium of exchange"?

C) Money can be traded for goods and services.

What conclusion can be made about the U.S. economy by examining this chart?

A) All aspects of the economy are related.

A farmer sells a truckload of grain for $1000. He then takes the cash to the tractor dealer and buys a new set of tires for his cultivator. This illustrates that one function of money is to be a

A) medium of exchange.

Alberto is a carpenter. He needs a new saw in order make more cabinets to sell to his buyers. To do this, he sells a bench he has made, and uses the money to purchase a new saw. What conclusion can you make using this example?

C) Alberto is using money as a medium of exchange.

James works at an automobile factory. Every day he goes to work and inspects the machines at the factory to make sure they are running smoothly. At the end of the every week, James is paid by his boss, Bill, for his good work. James takes his paycheck to the bank every Friday and deposits most of it, but keeps a little bit of spending money. He then takes his wife, Julie, out for dinner, using the leftover money from his paycheck. According to the circular flow of economics, which market is James participating in with his boss, Bill?

B) Factor Market

Before money was invented, how were goods and services exchanged?

B) Merchants and customers bartered.

Which type of transaction refers to a flow of MONEY through the economy?

B) Money is used to purchase goods and services in the product markets.

In a diagram of the circular flow of economic activity, businesses

B) buy productive resources from resource markets.

The diagram shows the circular flow of goods and resources in a market economy. According to this diagram, where do individuals sell their labor?

B) in the factor market

In the product market,

B) producers sell goods and services to consumers.

James works at an automobile factory. Every day he goes to work and inspects the machines at the factory to make sure they are running smoothly. At the end of the every week, James is paid by his boss, Bill, for his good work. James takes his paycheck to the bank every Friday and deposits most of it, but keeps a little bit of spending money. He then takes his wife, Julie, out for dinner, using the leftover money from his paycheck. According to the circular flow of economics, which market is James participating in by going out to dinner with his wife, Julie?

C) Product Market

Resource markets are LEAST LIKELY to sell

C) goods and services.

According to this diagram showing the circular flow of goods and resources, where do individuals spend the income they earn?

C) in the product market

Money can be easily converted into goods or services. This is an example of which "function of money"?

C) medium of exchange

Using this diagram, what outcome can be predicted if individuals stopped purchasing goods?

D) Businesses would experience all of these economic outcomes.

Which statement about the circular flow model is CORRECT?

D) Households earn income from the factor market and businesses earn revenue from the product market.

Which function of money is the above picture an example of? (Bitcoin)

D) Medium of Exchange