WorksheetsCircular Flow of Income
Total questions: 21
Worksheet time: 7mins
Name
Class
Date
1.
Which statement is true about the circular flow diagram?
a)
A Households are demanders in the product market and suppliers in the factor market
b)
A Business are demanders in the product market and suppliers in the factor market.
c)
A Households are demanders in the factor market and suppliers in the product market.
d)
A Businesses and households are not components of the circular flow diagram.
2.
Which arrows on this diagram would represent the transaction between Joe who rents his office to Homework Inc., a company that provides tutoring services?
a)
2,3
b)
4,7
c)
1,2
d)
5,6
3.
Arrows 4 and 7 on this circular flow diagram demonstrate
a)
prices
b)
taxes
c)
goods and services flow
d)
money flow
4.
The arrows 1 to 2 in this diagram represent which aspect of the economy?
a)
goods and services flow
b)
money flow
c)
taxes
d)
factors of production
5.
Place where buyers and sellers meet to exchange goods and services for money
a)
Market
b)
Factor of production
c)
Money
d)
Interdependent
6.
What is being represented by the "red flow line"
a)
The flow of money
b)
The flow of goods and services
c)
Taxes
d)
Productive resources
7.
What is being represented by the "green flow lines"
a)
Flow of Money
b)
Flow of Goods and Services
c)
Taxes
d)
law
8.
In the circular flow model, what do individuals sell to the factor market
a)
Services
b)
Money
c)
Productive Resources
d)
goods
9.
In the products market,
a)
firms buy goods and services from households
b)
firms sell goods and services to households
c)
firms sell resources to households
d)
firms buy resources from households
10.
The circular flow model of a market economy shows
a)
how profits are made
b)
what inputs are required for what outputs
c)
how many firms can support the needs of how many households
d)
the interactions between households and firms in the free market
11.
In the circular flow model, the product market describes _____.
a)
stores that sell goods and services to households
b)
the government paying for public goods
c)
households selling their labor to businesses
d)
households receive income from businesses
12.
What do businesses provide for consumers according to the circular flow model?
a)
goods and services
b)
only goods
c)
only services
d)
taxes
13.
Goods and services are sold in the ___ market
a)
Factor
b)
Product
14.
Which term belongs in the empty box near the bottom of the picture?
a)
Government
b)
Resource market
c)
taxes
d)
goods and services
15.
Steel Beam Inc. is looking to purchase a new steel-processing machine and factory. In the circular flow diagram, this transaction will take place in the
a)
Product market.
b)
Resource market
c)
Foreign Exchange market
d)
Public market
16.
Which term belongs in the blank rectangle in the center of the diagram?
a)
Government
b)
Resource market
c)
taxes
d)
goods and services
17.
Which one is NOT circular flow?
a)
Businesses
b)
Incentives
c)
Government
d)
Households
18.
This circular flow model would be for a __________ economy
a)
Traditional
b)
Planned/Command
c)
Free Market
d)
Mixed Economy
19.
This circular flow model would be for a __________ economy
a)
Traditional
b)
Planned/Command
c)
Free Market
d)
Mixed Economy
20.
Which of the following is not an injection into the circular flow of national income?
a)
Government expenditure
b)
Government salaries paid to civil servants
c)
Government taxation
d)
The purchase of a domestically produced good by a foreign company
21.
Which one of the following items constitutes a withdrawal/leakage from the circular flow of income of an economy?
a)
The purchase of a domestically produced good by a domestic company
b)
The purchase of a domestically produced good by a foreign company
c)
The payment of value added tax on goods sold in the domestic market
d)
Government aid to companies in financial difficulties
100 %
