Circular Flow Model Review

In the circular flow model, who are the owners of the productive resources?

• Businesses

• Households

• Government

• Banks

What do households receive in exchange for selling their productive resources in the resource market?

• Goods and services

• Revenue

• Income payments

• Taxes

The circular flow model shows that __________.

• households only play a passive role in the economy

• firms are solely responsible for creating demand

• there is a continuous flow of goods, services, and money between households and firms

• the government is the primary driver of economic activity

Where are factors of production (land, labor, etc) exchanged in the circular flow model?

• Resource Market

• Product Market

• Firms

• Individuals

Where are factors of production (land, labor, etc) exchanged in the circular flow model?

• Resource Market

• Product Market

• Firms

• Individuals

Someone buys a car in exchange for a large amount of money. They have completed an exchange in which part of the circuclar flow model?

• Product Market

• Factor Market

• Firms

• Individuals

Owen owns Tires Done Rite. How does own impact the circular flow model?

• Owen purchases resources from the factor market and provides a good to the product market.

• Owen gives revenue to the product market and the resource market.

• Owen gives wages to the product market and goods and services to the

• Owen gives revenue to the households and goods and services to the resource market.

A Business is also known as a __________ in economics.

Individuals make up the ____________ on the flow chart.