Circular Flow of Income - 2 Sector Model

The Circular Flow of Income - 2 Sector Model has two stakeholders. Who are they?

• Businesses & governments

• Consumers and suppliers

• Consumers and governments

• Households and businesses

True or False.

Consumers and Producers respond to and influence each other in the Circular Flow of Income Model of the economy?

The blue line (outer flow) of the Circular Flow of Income represents the flow of WHAT between Households and Businesses?

• Income

• Outputs

• Consumption

• Economic resources

What 'resource(s)' does the Business sector provide to Households?

• Economic Resources (land, labour, capital, enterprise)

• Outputs (goods and services)

• Consumption

• Income

The inner RED line represents the flow of 'what' within the economy?

• Money

• Resources

• Workers

• Spending

What does the Household sector provide to the Business sector?

• Land

• Labour (workers)

• Capital (money)

• All of the above

• None of the above

When a Household receives 'wages for labour' from the Business sector, this is called

• Consumption spending

• Economic resources

• Outputs

• Income

When a Household provides LAND to the Business sector, this 'land' is called?

• Goods and Services

• Economic Resource

• Consumption

• Income

When a household pays for goods and services, this is called

In the Circular Flow of Income Model, which 'sector' does this image represent?

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OFF