Circular Flow Model Problem Sets

What do households provide to the factor (resource) market?

• Goods and services

• Land, labor, capital, entrepreneurial ability

• Money for consumption

• Business revenue

Refer to the 'Circular Flow Model of Economic Activity' diagram. What do firms (businesses) provide to the product market?

• Money for consumption

• Goods and services

• Factors of production

• Wages and rent

Refer to the 'Circular Flow Model of Economic Activity' diagram. Fill in the blank: Households receive ______ from the factor (resource) market.

• Money: income, wages, rent, interest, profit

• Goods and services

• Taxes and subsidies

• Loans and investments

Refer to the 'Circular Flow Model of Economic Activity' diagram. Which market is responsible for the exchange of goods and services?

• Product Market

• Factor (Resource) Market

• Money Market

• Stock Market

Refer to the right diagram of the 'Circular Flow Model of Economic Activity.' What does arrow 3 represent?

• Money for consumption

• Goods and services

• Factors of production

• Cost for running the business

Refer to the right diagram of the 'Circular Flow Model of Economic Activity.' What does arrow 6 represent?

• A) Money: income, wages, rent, interest, profit

• B) Goods and services

• C) Factors of production

• D) Business revenue

Milin brings her six-year-old son to Dunkin' Donuts for breakfast this Saturday morning. a. Milin is a member of a _________ and acted as a __________ in the __________ market for this transaction.

• household, buyer, product

• firm, seller, resource

• household, seller, product

• firm, buyer, resource

Milin brings her six-year-old son to Dunkin' Donuts for breakfast this Saturday morning. b. Dunkin Donuts represents a _________ and acted as the __________ in the __________ market for this transaction.

• firm, seller, product

• household, buyer, resource

• firm, buyer, resource

• household, seller, product

Fisher and his brother Hunter own a large family farm where they raise chickens. They sell the chickens to Pardue Chicken Company. a. Fisher and Hunter are members of a __________, and collectively act as the __________ of chickens in the __________ market.

• household, seller, factor

• firm, buyer, product

• household, buyer, product

• firm, seller, product

Matthew owns and operates a local competitive cheer gym. At his gym he provides cheer lessons, tumbling, and all-star cheer teams. a. Matthew’s cheer business provides a ____. The tumble track, and equipment represent ____ that Matthew utilizes for his business. Matthew would be considered a(n) ____ that acts as a ____ in the ____ market. What is the correct sequence of terms to fill in the blanks?

• service, capital, entrepreneur, seller/firm, product

• good, land, household, buyer, factor

• labor, capital, firm, seller, product

• service, labor, entrepreneur, buyer, product