Practice Problems For The Circular Flow of Economic Activity

The money that households spend would best be represented with a line from ____ to ______.

• households, product

• households, factor

The FINAL flow of goods and services would be from

• product market to households

• factor market to households

The flow of the factors of production  would best be represented with a line from ____ to _________.

• households, product

• households to factor

The factor market is where things get turned into __________.

• final goods.

•  

  capital goods.

You operate a toy store. Christmas is coming and you need more workers. The revenue from your toy sales is represented by and arrow from box D to box A. The new workers will be represented by an arrow from ?

• box A to box C

• box B to box C

• box D to box D

• box A to box B

Maria works for her uncle and gets an hourly wage. Her brother also works for him but only gets commision.  Maria's wage is represented by a flow of dollars from box B to Box D.  Her brother's commission would be represented by a flow of dollars from __ to __.

• box B to box D

• box C to box A

• box A to box C

• box A to box B

If the BUYERS of the factors of production are represented by box B, then

• businesses are represented by box C

• businesses are represented by box A

• Households are represented by box A

• households are represented by box C