Circular Flow Diagram

An economic model that shows the flow of money, goods, and services between households and businesses.

• Circular Flow Diagram

• Production Possibilities Frontier

• Cost Benefit Analysis

• Supply and Demand Graph

The outside arrows of the circular flow diagram show the flow of _____________.

• goods and services

• Factors of production

• Money

• opportunity cost

The arrows on the inside of the circular flow model show the flow of ___________.

• money

• factors of production and goods and services

• opportunity cost

• marginal benefit

In the factor market, __________ sell factors of production.

• girl scouts

• the government

• businesses

• households

In the product market, __________ sell goods and services.

• girl scouts

• the government

• businesses

• households

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

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