Grade 12 Economics Quiz: Circular Flow Model

What is the circular flow model primarily used to illustrate?

• The flow of money only

• The flow of government policies

• The flow of international trade

• The flow of goods and services

Which of the following is NOT a participant in the circular flow model?

• Non-profit organizations

• Households

• Businesses

• Foreign sector

What does the term 'injections' refer to in the circular flow model?

• Consumer spending

• Money withdrawn from the economy

• Money introduced into the economy

• Government regulations

Which market is associated with the trading of long-term financial instruments?

• Money market

• Capital market

• Goods market

• Foreign exchange market

What is the primary role of the financial sector in the circular flow model?

• To regulate the economy

• To facilitate savings and investments

• To provide public goods

• To produce goods and services

Which of the following best describes a closed economy?

• An economy that trades with other countries

• An economy with no foreign sector

• An economy that only exports

• An economy that only imports

What is the definition of 'leakages' in the context of the circular flow model?

• Consumer savings

• Money introduced into the economy

• Money withdrawn from the economy

• Government spending

Which of the following is an example of consumption spending?

• Paying taxes

• Investing in stocks

• Saving money in a bank

• Buying a new car

What does the term 'real flow' refer to?

• The flow of government spending

• The flow of goods and services

• The flow of investments

• The flow of money

Which of the following is a characteristic of an open economy?

• Only imports goods

• No trade with foreign countries

• Only exports services

• Trade with the foreign sector