Circular flow model

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

Flow of Money

which is being represented by the green flow lines

In simple circular flow models of markets, economists categorize the ultimate "owners" of all labor and non-labor resources as:

Households

The circular flow model shows the

flow of expenditure and incomes that arise from the households' and business' decisions.

What do businesses provide for consumers according to the circular flow model

goods and services

How does the government receive its revenue

household and business taxes

Product Market

households purchase the goods and services that firms produce

what is the role in households and firms

households supply resources and firms supply output

what do households provide to the resource market

land, labor, capital, entrepreneurship

the payments firms make through resource markets to households are:

wages, interest, rent, and profits.

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

Factor Market

firms purchase the factors of production from households

which is on the buying side of the resource markets?

only businesses

In the circular flow model, which of the following owns the factors of production?

only households

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

consumption goods are brought and sold in the

product market

How do households receive income from the government?

providing labor sources

Choices often have to be made because productive resources are limited while wants and needs are limited. This situation is known as

scarcity

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