Circular Flow Matrix- How the economy works

The video introduces the concept of the circular flow matrix in economics, explaining how products, resources, and money circulate in a market economy. It covers the roles of households and businesses, the factors of production, and the flow of money. The video also discusses the government's role in the economy, including public goods and transfer payments. It concludes with a reflection on the impact of capitalism and the matrix on society.

What is the primary role of households in the resource market?

• To buy goods and services

• To provide government subsidies

• To supply resources

• To demand products

Which of the following is NOT a factor of production?

• Capital

• Land

• Labor

• Revenue

What is the term used for the money businesses receive from selling products?

• Interest

• Revenue

• Wages

• Consumer spending

How does the government fund public goods and services?

• By borrowing from other countries

• Through consumer spending

• By taxing businesses and households

• By selling products in the market

What is a transfer payment?

• Interest earned on capital

• Payment for goods and services

• A type of consumer spending

• Money given by the government without receiving goods or services in return