1. The economy's income and expenditureThe following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and theinner set of arrows (shown in red) shows the corresponding flow of inputs and outputs.FirmsBased on this model, households earn income whenMarkets forGoods and ServicesMarkets forFactors of ProductionRosa's laborHouseholdsSuppose Rosa earns $575 per week working as an air traffic controller for PlaneRed Airlines. She uses $9 to buy shampoo at Christian's Corner Store.Christian's Corner Store pays Nick $375 per week to stock shelves. Nick uses $125 to purchase a flight from PlaneRed Airlines.purchaseIdentify whether each of the following events in this scenario occurs in the market for factors of production or the market for goods and services.EventMarket for Factors of Production Market for Goods and ServicesRosa spends $9 to buy shampoo.Rosa earns $575 per week working for PlaneRed Airlines.Nick spends $125 to purchase a flight from PlaneRed Airlines.TrueThe $125 Nick spends to purchase a flight from PlaneRed AirlinesThe shampoo Rosa receivesO Falsein markets for factors of production.Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all thatapply.True or False: The actual economy is more complicated than the simple one illustrated in this circular-flow diagram.O

The circular flow model shows how the money in the economy circulates from households to firms.…

1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Firms Markets for Goods and Services Markets for Factors of Production Households

1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Firms Markets for Goods and Services Markets for Factors of Production Households

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter4: Labor And Financial Markets

Section: Chapter Questions

Problem 31P: Table 4.6 shows the amount of savings and barrowing in a market for loans lo purchase homes,...

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