Circular Flow Model Quiz

What does the Circular Flow Model describe?

• The flow of money and goods and services between different sectors of the economy

• The flow of water in a circular motion

• The flow of air in the atmosphere

• The flow of electricity in a circuit

Which sector is responsible for the production of goods and services in the Circular Flow Model?

• Household sector

• Financial sector

• Firms sector

• Government sector

What is the role of the Financial sector in the Circular Flow Model?

• Producing goods and services

• Lending money to Firms to spend on machinery, buildings, and equipment

• Spending money on public goods and services

• Paying money to the Government

What does 'Expenditure' refer to in the Circular Flow Model?

• The purchase of goods and services

• Money received, e.g., wages, rent, and interest

• Goods and services produced to be sold

• Money saved

What does 'Imports (M)' refer to in the Circular Flow Model?

• Goods and services produced by Firms in Australia and sold to other countries

• Goods and services produced by businesses in other countries and sold to Australia

• Money the Financial sector lends to Firms

• Money paid to the Government

What does 'Savings (S)' refer to in the Circular Flow Model?

• Money received, e.g., wages, rent, and interest

• Money saved

• Money paid to the Government

• Goods and services produced to be sold

What does 'Government expenditure (G)' refer to in the Circular Flow Model?

• Money the government spends on public goods and services

• Money received, e.g., wages, rent, and interest

• Money saved

• Goods and services produced to be sold

What does 'Exports (X)' refer to in the Circular Flow Model?

• Goods and services produced by businesses in other countries and sold to Australia

• Goods and services produced by Firms in Australia and sold to other countries

• Money the Financial sector lends to Firms

• Money paid to the Government

What does 'Household sector' refer to in the Circular Flow Model?

• Businesses in the economy

• Banks and other financial institutions

• Individuals in the economy

• The national, state, and local government

What does 'Overseas sector' refer to in the Circular Flow Model?

• The economic transactions of the economy with the rest of the world

• Money the government spends on public goods and services

• Money saved

• Goods and services produced to be sold