1.6 circular flow

6 circular flow

Open Ended

What are the 2 SECTORS of the circular flow?

Multiple Choice

It is best to study the circular flow with the HOUSEHOLD on the

• left

• right

Open Ended

If you keep the household on the left, what MARKET goes at the bottom?

The households and the business are not connected by a line, but by an ARROW. The direction of the arrow is important.

Notice the Factors of Production flow FROM the household TO the business.

Open Ended

Remind me what is in the RESOURCES market? (the 4 factors of production)

-

-

-

-

Notice how the INCOMES earned flow FROM the business TO the household

a household gives the business their labor and in return the business gives the household wages.

Multiple Choice

And remind me again which income is correct?

• Labor -- Wages

  Land -- Rent

  Capital -- Interest

  Entrepreneurship -- Profit

• Land - Rent

  Labor -- Income

  Capital --profit

  Entrepreneurship--wages

Easy- right?

Always keep households on the LEFT and

L.L.C.E.=W.R.I.P. on the BOTTOM.

You have at least 1/2 of it memorized!

Open Ended

So if resources are the bottom market, what is the TOP market?

Open Ended

In the product market (top) what flows FROM the business TO the household?

Multiple Choice

In this product market (top) What do households (consumers) give to business in return for goods and services?

• money!

• gratitude

• labor

Open Ended

The final value of all goods and services produced in the United states is called _______

Open Ended

In your own words, explain what happens in the RESOURCE market (bottom)

Open Ended

In your own words, explain what happens in the PRODUCT market (top)