Circular Flow of Money

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Circular Flow Model

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Multiple Choice

What three entities make up the circular flow model?

• businesses, households, and the government

• Buyers, sellers, producers

• Local, state, and federal government

• President Obama, Katy Perry, Waka Flocka

Multiple Choice

When WalMart pays income taxes, what two parts of the circular flow model are involved?

• consumers and producers

• businesses and government

• consumers and government

• producers and consumers

Multiple Choice

In the circular flow model, the product market describes _____.

• stores that sell goods and services to households

• the government paying for public goods

• households selling their labor to businesses

• households receive income from businesses

Multiple Choice

Which of the following is NOT a factor of production?

• land

• labor

• capital

• goods and services

Multiple Choice

What is being represented by the "red flow line"?

• The flow of money

• The flow of goods and services

Multiple Choice

What is being represented by the "green flow lines"?

• the flow of money

• t flow of goods and services

Multiple Choice

Box A is

• Households

• Firms

• Factor Market

• Product Market

Multiple Choice

Box C is

• Households

• Firms

• Factor Market

• Product Market

Multiple Choice

Box B is

• Households

• Firms

• Factor Market

• Product Market

Multiple Choice

Arrow 1 represents

• consumer goods purchased

• business revenue

• inputs used as a resource for production

• payment for wages, salary, income, rent or interest payments

• consumption spending

Multiple Choice

Arrow 3 represents

• consumer goods purchased

• business revenue

• inputs used as a resource for production

• payment for wages, salary, income, rent or interest payments

• consumer products sold (outputs)

Multiple Choice

Arrow 5 represents

• money received as income

• land, labor, capital, entrepreneurial ability

• inputs used as a resource for production

• payment for wages, salary, income, rent or interest payments

• consumer products sold (outputs)

Multiple Choice

Arrow 7 represents

• money received as income

• land, labor, capital, entrepreneurial ability

• inputs used as a resource for production

• payment for wages, salary, income, rent or interest payments

• consumer products sold (outputs)

Multiple Choice

Who are the demanders/consumers in the product market?

• Households

• Firms

Multiple Choice

Who are the demanders/consumers in the factor market?

• Households

• Firms

Multiple Choice

Who are the suppliers/producers in the Factor Market?

• Household

• Firms

Multiple Choice

The function of money in which it is accepted as payment for goods and services

• unit of account

• medium of exchange

• store of value

​Watch Economic Lowdown for a basic explanation of the circular flow model

Multiple Choice

Point B represents

• Product Market

• Factor Market

• Individuals

• Businesses

Multiple Choice

What are the four main parts of the circular flow diagram?

• Product Market, Stock Market, Factor Market, Fish Market

• Product Market, House Market, Factor Market, Good Market

• Factor Market, Product Market, Households, Firms

• Factor Market, households, Stock Market, super market

Multiple Choice

What does point A represent on the Circular flow diagram?

• Households

• Businesses

• Factor Market

• Product Market

Multiple Choice

Where are factors of production (land, labor, etc) exchanged in the circular flow model?

• Factor Market

• Product Market

• Firms

• Individuals

Multiple Choice

Where do factors of production (land, labor, etc) come from in the circular flow model?

• Factor Market

• Product Market

• Firms

• Individuals

Multiple Choice

In the circular flow diagram firms pay wages for which factor of production?

• Land

• Labor

• Entrepreneurship

• Raw materials

Multiple Choice

The exchange of money for goods/services to consumers is represented in which part of the circular flow diagram?

• 1 and 2

• 3 and 4

• 5 and 6

• 7 and 8

Multiple Choice

The delivery of finished products for sale in exchange for revenue is represented in which arrows?

• 1 and 2

• 3 and 4

• 5 and 6

• 7 and 8

Multiple Choice

Someone buys a car in exchange for a large amount of money. They have completed an exchange in which part of the circuclar flow model?

• Product Market

• Factor Market

• Firms

• Individuals