Circular flow model
Where do factors of production come from in the circular flow model?
Individuals
Resource Market
market for factors of production
Product Market
market for goods and services
Firms
offers goods/services for households to consume
Households
purchase/consume goods offered by firms
Circular flow model
represents how goods, services, and money moves through our economy
Market for factors of production (resource market)
-where firms purchase factors of production from households in exchange for (money, wages, or rent) -where households sell their factors of production to firms in exchange for money
Market for goods and services (product market)
-where households purchase goods and services from firms in exchange for money -where firms produce/sell goods and services to households in exchange for money
Which arrows represent the transaction between a landlord and a company?
4, 7
Point B on the Circular Flow model represents:
Businesses
Businesses provide government with...
Taxes
A person stocks shelves at a grocery store and receives a wage. They completed an exchange in which part of the model?
Factor Market
What are the four main parts of the circular flow diagram?
Factor Market, Product Market, Households, Firms
Economic Growth occurs when a nation's total output of ___ increases.
Goods
What does point A represent on the Circular flow diagram?
Product Market
Where does it take place?
Product Market & Resource Market
Someone purchases a car. This happens in which part of the model?
Product market
What drives the circular flow model?
Profit
What are the two main players?
households & firms