Circular Flow Practice

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

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

• Headaches

• Public goods and services

• More Congressmen

• Greater control of the media

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

In the products market

• firms buy goods and services from households
• firms sell goods and services to households
• firms sell resources to households
• firms buy resources from households

The government main source of funds

• bonds
• government charges
• transfer payments
• net taxes

Arrows 4 and 7 on this circular flow diagram demonstrate

• prices

• taxes

• resources

• money flow

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

• Product market.
• Resource market
• Foreign Exchange market
• Public market

Which term belongs in the blank rectangle in the center of the diagram?

• Government
• Resource market
• taxes
• goods and services

Which term belongs in the empty box near the bottom of the picture?

• Government
• Resource market
• taxes
• goods and services