Circular Flow Model #3

What do the households provide businesses?

• Labour
• Wages
• Resources
• Goods and services

Resource markets are LEAST LIKELY to sell

• land.

• capital.

• goods and services

• labor and entrepreneurs.

Using this diagram, what outcome can be predicted if individuals stopped purchasing goods?

• Businesses would lose income.

• Businesses would produce less goods.

• Businesses would not be able to pay for resources.

• Businesses would experience all of these economic outcomes.

James works at an automobile factory. Every day he goes to work and inspects the machines at the factory to make sure they are running smoothly. At the end of the every week, James is paid by his boss, Bill, for his good work. James takes his paycheck to the bank every Friday and deposits most of it, but keeps a little bit of spending money. He then takes his wife, Julie, out for dinner, using the leftover money from his paycheck.

According to the circular flow of economics, which market is James participating in with his boss, Bill?

• Stamp Market

• Factor Market

• Product Market

• Automobile Market

In the product market,

• productive resources are bought and sold.

• producers sell goods and services to consumers.

• a nation's total output of goods and services increases.

• the amount of output produced by a given amount of inputs is measured.

The circular flow model of a market economy shows

• how profits are made
• what inputs are required for what outputs
• how many firms can support the needs of how many households
• the interactions between households and  firms in the free market

An entrepreneur is a person who —

• takes the risk of production to earn a profit
• enforces government regulations for business
• manages financial investments
• sets the interest rates at banks

In this market, businesses buy resources they need to produce goods and services.

• factor market
• stores
• product market
•  businesses