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
