Circular Flow

spending-->production-->income-->leads to more...

• spending

• production

• income

• time in jail

In the circular flow, we can actually talk about two markets. What are they?

• Natural market and stable market

• Command market and free market

• Resource market and product market

All of the following flow among households, businesses, and the government in American economy EXCEPT:

• Resources

• Laws

• Goods and services

• Money

All of the following are resources provided by households EXCEPT

• Labor

• Investment (money)

• Ideas

• Factories

Businesses spend their income in ALL of the following ways EXCEPT--

• Purchase labor

• Pay taxes

• Purchase capital resources

• Expand their businesses

• Actually these are all ways that businesses spend their incomes

What does government provide with the revenue it takes in from taxes?

• Headaches

• Public goods and services

• More Congressmen

• Greater control of the media

Is KFC an example of a product or resource market?

• Product

• Resource

• Both

Critical thinking question--what happens to the US economy if people lose their jobs?

• They lose their income, which slows spending, this slows production, which leads to more people losing their jobs, which slows spending...

• Lots of people return to school to become teachers

• The price of labor goes up

• The supply of labor goes down