Applied Economics - Circular Flow of Economic Activity

The relationship between Households and Firms is best described as...

• Independent

• Interdependent

The term Households, refers to all the consumers in our economy

• True

• False

Firms sell their resources to Households, and in exchange they are paid an income

• True

• False

Households sell goods and services to Firms

• True

• False

Capital...

• is the ability to combine all 4 resources

• is the human made items used in the production process

Individuals sell __________ to businesses and in return individuals earn an __________.

• profit, income
• resources, products
• resources, income
• profit, individuals

Businesses sell __________ to individuals and in return businesses earn a __________.

• products, profit
• businesses, individuals
• resources, profit
• income, profit

Money taken by the government from the amount individuals or businesses make at work.  This can be defined as....

• Interest Rate
• Money
• Currency
• Income Tax

How do governments get their money?

• Tax Businesses

• Tax Households

• Tax both Businesses and Households

• They print their own money

In which market do businesses sell?

• Product Market

• Factor Market

• Market Economy

• Fresh Market