Answered: Money income RESOURCE MARKET Labor,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Using the language of and components of the circular flow diagram, identify which institution or group of institution (s) of the circular flow model is (are) missing? Explain how you might include those groups into this model.

Answer the questions:

In what way are business and households both sellers and buyers in this model?
What are the flows in this circular flow model?

Base your argument on an example from the current economic situation in the U.S. or abroad and explain why market economies usually do a better job than command economies.

Money income
RESOURCE
MARKET
Labor, land
Households sell
capital,
Businesses buy
HOUSEHOLDS
BUSINESSES
sell resources
buy resources
sell products
buy products
PRODUCT
MARKET
Goods and services
Businesses sell
Households buy
Consumption
(wages, rents
Interest, profits
entrepre-
eurial abilit
Costs
Resources
expenditures
Goods and se
Revenue

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