8. Circular Flow Model

Overall, what does the 'circular flow model' show in economics?

• money

• interdependence between sectors

• the flow of income between sectors

• the way that the government interacts in the economy

What is 'interdependence'?

• When something is able to achieve something on its own.

• When two or more things rely on each other.

• When one thing must have multiple levels of support

• When the only things you can rely on are people close to you.

Governments spend _________________ on producers/firms to boost production and spending the economy.

• labour

• goods and services

• money

• capital

Governments earn money from _________________ households and firms.

• stealing from

• working with

• trading with

• taxing

The finance sector spends money by _________________ in firms and governments.

• working

• diving

• taxing

• investing

The finance sector earns money from ___________________ made by households.

• tax

• dividends

• savings

• shares

Which of these is not one of the sectors on the circular flow model?

• finance sector

• household sector

• online sector

• firms sector

Which two things are the main sectors of the circular flow model?

• firms and government

• overseas and household

• finance and overseas

• household and firm

Which of the below would most likely be a way that the government spends money in the circular flow model?

• cars for citizens

• providing parks and hospitals

• buying houses

• creating TV shows for Netflix

What do firms provide to the households in the circular flow model?

• labour

• investments

• imports

• wages or salary