Circular Flow of Income Model

Identify the main 5 sectors in the CFIM

• Households, Firms, Producers, Financial, Government

• Firms, Financial, Government, Overseas, Banks

• Households, Firms, Financial, Government, Overseas

• Overseas, Businesses, Firms, Consumers, Government

The role of Households is to:

• Provide resources to Firms and spend money on goods and services

• Sell goods and services and spend their income

• Spend money to consume goods and services and provide income to consumers

• Purchase resources from Firms and spend money on goods and services

The role of Firms in the economy is to:

• Sell land, labour and capital and make goods and services

• Invest in capital goods to spend money and inject income into the economy

• Produce goods and services and provide an income to households

• Produce goods and services and spend money on goods and services

The leakage for the Financial sector is:

• Taxation

• Savings

• Imports

• Exports

The leakage for the Government Sector is:

• Savings

• Imports

• Government Expenditure

• Taxation

The leakage of the Overseas sector is:

• Imports

• Exports

• Investment

• Taxation

The injection for the Financial Sector is:

• Savings

• Government Expenditure

• Investment

• Exports

The injection for the Government Sector is:

• Taxation

• Investment

• Government Expenditure

• Exports

The injection for the Overseas sector is:

• Investment

• Exports

• Imports

• Government Expenditure

In the CFIM 'O' stands for Output. This refers to which flow?

• Consumer Expenditure

• Goods and Services

• Providing an income

• Selling productive resources (land, labour, capital)