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