### 13. The Circular-Flow ModelThe 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.![Circular-Flow Diagram](circular_flow_diagram.png)**Diagram Explanation:**- The diagram consists of four main components: - **Firms:** Represented by a blue box on the left. - **Households:** Represented by a blue box on the right. - **Markets for Goods and Services:** Represented by a yellow box at the top. - **Markets for Factors of Production:** Represented by a yellow box at the bottom.- **Outer Green Arrows:** Indicate the flow of dollars. Dollars flow from households to firms through the markets for goods and services and return from firms to households through the markets for factors of production.- **Inner Red Arrows:** Indicate the flow of inputs and outputs. Inputs flow from households to firms through the markets for factors of production, while outputs flow from firms to households through the markets for goods and services.Based on this model, households earn income when ____ purchase ____ in factor markets.Suppose Ginny earns $600 per week working as a cook for Wingies. She uses $9 to take a spin class at Silver’s Gym. Silver’s Gym pays Eric $325 per week to work as a trainer. Eric uses $125 to purchase chicken wings from Wingies.### Identifying Market Events:Identify whether each of the following events in this scenario occurs in the factor market or the product market.| Event | Factor Market | Product Market ||--------------------------------------------------|:-------------:|:--------------:|| Eric earns $325 per week working for Silver’s Gym.| ◯ | ◯ || Ginny spends $9 to take a spin class. | ◯ | ◯ || Ginny earns $600 per week working for Wingies. | ◯ | ◯ |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 that apply.**⬜ The $125 Eric spends to purchase chicken wings from Wingies⬜ The $325 per week Eric earns working for Silver

An economic concept that illustrates the continuous movement of money and goods/services within an…

Based on this model, households earn income when purchase in factor markets. Suppose Ginny earns $600 per week working as a cook fo Wingies. She uses $9 to take a spin class at Silver's Gym. Silver's Gym pays Eric $325 per week to work as a trainer. uses $125 to purchase chicken wings from Wingies. Identify whether each of the following events in this scenar occurs in the factor market or the product market. Factor Market Product Market Event Eric eams $325 per week working for Silver's Gym. Ginny spends $9 to take a spin class. Ginny earns $600 per week working for Wingles. Which of the elements of this scenario represent a flow fr a household to a firm? This could be a flow of dollars, inp or outputs. Check all that apply. The $125 Eric spends to purchase chicken wings from Wingies The $325 per week Eric earns working for Silver's Gym Ginny's labor The spin class Ginny receives

Based on this model, households earn income when purchase in factor markets. Suppose Ginny earns $600 per week working as a cook fo Wingies. She uses $9 to take a spin class at Silver's Gym. Silver's Gym pays Eric $325 per week to work as a trainer. uses $125 to purchase chicken wings from Wingies. Identify whether each of the following events in this scenar occurs in the factor market or the product market. Factor Market Product Market Event Eric eams $325 per week working for Silver's Gym. Ginny spends $9 to take a spin class. Ginny earns $600 per week working for Wingles. Which of the elements of this scenario represent a flow fr a household to a firm? This could be a flow of dollars, inp or outputs. Check all that apply. The $125 Eric spends to purchase chicken wings from Wingies The $325 per week Eric earns working for Silver's Gym Ginny's labor The spin class Ginny receives

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter6: Tracking The U.s. Economy

Section: Chapter Questions

Problem 2.4P

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Question

### 13. The Circular-Flow Model

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.

![Circular-Flow Diagram](circular_flow_diagram.png)

**Diagram Explanation:**
- The diagram consists of four main components:
- **Firms:** Represented by a blue box on the left.
- **Households:** Represented by a blue box on the right.
- **Markets for Goods and Services:** Represented by a yellow box at the top.
- **Markets for Factors of Production:** Represented by a yellow box at the bottom.
- **Outer Green Arrows:** Indicate the flow of dollars. Dollars flow from households to firms through the markets for goods and services and return from firms to households through the markets for factors of production.
- **Inner Red Arrows:** Indicate the flow of inputs and outputs. Inputs flow from households to firms through the markets for factors of production, while outputs flow from firms to households through the markets for goods and services.

Based on this model, households earn income when ____ purchase ____ in factor markets.

Suppose Ginny earns $600 per week working as a cook for Wingies. She uses $9 to take a spin class at Silver’s Gym. Silver’s Gym pays Eric $325 per week to work as a trainer. Eric uses $125 to purchase chicken wings from Wingies.

### Identifying Market Events:
Identify whether each of the following events in this scenario occurs in the factor market or the product market.

| Event | Factor Market | Product Market |
|--------------------------------------------------|:-------------:|:--------------:|
| Eric earns $325 per week working for Silver’s Gym.| ◯ | ◯ |
| Ginny spends $9 to take a spin class. | ◯ | ◯ |
| Ginny earns $600 per week working for Wingies. | ◯ | ◯ |

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 that apply.**

⬜ The $125 Eric spends to purchase chicken wings from Wingies
⬜ The $325 per week Eric earns working for Silver

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