Circular Flow

According to the circular flow model, in which market are firms sellers?

• Product Market

• Resource Market

In which market do sellers prefer high prices?

• Product

• Factor

According to the circular flow model, in which market are households sellers?

• Resource Market

• Product Market

In which market do households prefer high prices?

• Product Market

• Factor Market

Match the following

• Households

• Supply the product market with goods & services

• Firms

• where goods & services are sold

• Product Market

• Consume goods & services in the product market

• Resource/Factor Market

• Where inputs are sold

If households have less ​ (a)   earned from the resource market, they spend ​ (b)   money in the ​ (c)   market. This also means less ​ (d)   for firms.

• income
• less
• product
• revenues

According to the circular flow model, what flows into firms from the product market?

• goods and services

• inputs

• outputs

• money

Why do firms need households?

• to sell them labor

• to buy labor from them

How is the product market affected if firms have less revenues?

• more goods and services can be made

• fewer goods and services can be made

When are firms able to spend greater amounts of money on labor? (CHOOSE 2)

• when their revenues rise

• when their revenues fall

• when households buy more

• when households buy less