Circular Flow of Income Check-In

What does the Circular Flow Model illustrate?

• how the government redistributes wealth to society

• the traditional system of distributing goods & services

• how entrepreneurs earn a profit

• the interdependence of the three major sectors of the economy

Which of the following is NOT a major sector of the economy?

• entrepreneurs

• government

• businesses

• households

Which of the following is the NUMBER ONE way that households use income?

• Saving

• Taxes

• Spending

• Loans

Which of the following is the NUMBER TWO way that households use income?

• Taxes

• Saving

• Spending

• Loans

Which of the following is the NUMBER THREE way that households use income?

• Taxes

• Loans

• Saving

• Spending

Household SAVINGS go to which sector of the economy?

• Households

• Businesses

• Government

• Banks & Brokers

TAXES are paid by

• Households

• Businesses

• Government

• Households AND businesses

• None of the above

Taxes provide ________ to households & businesses.

• private goods & services

• loans

• public goods & services

• investments

Which of the following is NOT an example of a public good/service?

• community parks

• your local elementary school

• highways/roads

• grocery stores

Households are incentivized to save their money with banks and brokers because they earn ____ on their savings.

• interest

• wages

• private goods & services

• taxes