Unit 3 Quiz 1 The Circular Flow

Use the diagram to answer the question.

Workers decide to go on strike to protest working conditions. Based on the diagram, what would be the MOST immediate impact of this decision?

• The business would have less access to factors

  of production.

• Households would experience an increase in

  wages and incomes.

• The business would see an increase in demand

  for goods and services.

• Households would have more access to goods

  and services.

Use the circular flow diagram to answer the question.

How do goods and services flow between households and businesses?

• from households to businesses through the

  product market

• from businesses to households through the

  product market

• from households to businesses through the

  resource market

• from businesses to households through the

  resource market

Use the circular flow diagram to answer the question.

What flows from businesses to households through the resource market?

• labor

• revenue

• income

• expenditures

Use the circular flow diagram to answer the question.

Which element flows from households to businesses through the product market?

• labor

• income

• interest

• revenue

Use the circular flow diagram to answer the question.

What roles do businesses play in this model? Select ALL that apply.

• Businesses act as sellers of commercial debt.

• Businesses act as consumers of commercial

  debt.

• Businesses act as sellers of goods and services.

• Businesses act as consumers of goods and

  services.

• Businesses act as consumers of factor of production

  resources.

Use the diagram illustrating the US economy to answer the question.

Which statement about the relationships illustrated in the diagram are correct?

• The inner arrows represent the flow of money

  and the outer arrows represent the flow of

  products and resources.

• The inner arrows represent the flow of products

  and resources and the outer arrows represent

  the flow of money.

• The inner arrows represent the impact of

  monetary policy and the outer arrows represent

  the impact of fiscal policy.

• The inner arrows represent the impact of fiscal

  policy and the outer arrows represent the impact

  of monetary policy.

Which statement BEST explains the roles of businesses and households in the Product market?

• Households sell products, while businesses buy

  products.

• Both households and businesses buy products.

• Households buy products, while businesses sell

  products.

• Both households and businesses sell products.

Look at the circular flow diagram of a free market economy. Then answer the question that follows.

Which of the following correctly completes the diagram?

• Businesses

• Consumers

• Markets

• Stocks

What occurs in the factor market?

• Money flows from households to businesses and finished products flow from businesses to

  households.

• Money flows from households to businesses and productive resources flow from businesses to

  households.

• Money flows from businesses to households and productive resources flow from households to

  businesses.

• Money flows from businesses to households and finished products flow from households to

  businesses.

In the circular flow diagram, what do businesses pay households for in the factor market?

• Interest

• Income

• Goods and services

• Taxes