Economics Circular Flow Quiz Review
In simple circular flow models of markets, economists categorize the ultimate "owners" of all labor and non-labor resources as:
Households
factors of production
land, labor, capital
What do households provide to the resource market?
land, labor, capital, and entrepreneurship
In the circular flow model, which of the following is on the buying side of the resource markets?
only business
In the circular flow model, the product market describes
stores that sell goods and services to households
The circular flow model of a market economy shows
the interactions between households and firms in the free market
What do businesses provide for consumers according to the circular flow model?
goods and services
What do you earn from a business?
Income
When individuals work for businesses, what resource are they providing?
Labor
What does government provide with the revenue it takes in from taxes?
Public goods and services
Steel Beam Inc. is looking to purchase a new steel-processing machine and factory. In the circular flow diagram, this transaction will take place in the
Resource market
In the circular flow model, which owns the factors of production?
only households
According to the circular flow model, households supply _______ and firms supply ______
resources, output
Choices often have to be made because productive resources are limited while wants and needs are limited. This situation is known as
scarcity
In the circular flow model, consumption goods are bought and sold in the
product market
The circular flow model demonstrates that the decision by households not to purchase as many new cars this year is signaled in the
product market and not the resource market.
In the simple circular flow model, the payments firms make through resource markets to households are:
wages, interest, rent, and profits.
In the circular flow model, which of the following flows in the opposite direction from the flow of factors of production?
wages, rent, interest, and profit
In this market, businesses buy resources they need to produce goods and services.
factor market
The circular flow model shows the
flow of expenditure and incomes that arise from the households' and business' decisions.
According to the Circular Flow chart, the government receives its revenues from
household and business taxes