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 associated flow of inputs and outputs. Firms Markets for Goods and Services Markets for Factors of Production Households Which of the following statements regarding this economic model are true? O While simple, the circular-flow diagram can still be useful for the purposes of modeling how dollars and resources move throughout an economy. O Because it does not take into account international trade, the circular-flow diagram is useless for the purposes of modeling how dollars and resources move throughout an economy. Because, in reality, the economy is very large, the simplicity of the circular-flow diagram makes it useless for the purposes of modeling how dollars and resources move throughout an economy. O Because it does not take into account the role of government, the circular-flow diagram is useless for the purposes of modeling how dollars and resources move throughout an economy.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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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 associated flow of inputs and outputs.
Firms
Markets for
Goods and Services
Markets for
Factors of Production
Households
Which of the following statements regarding this economic model are true?
O While simple, the circular-flow diagram can still be useful for the purposes of modeling how dollars and resources move throughout an
economy.
O Because it does not take into account international trade, the circular-flow diagram is useless for the purposes of modeling how dollars
and resources move throughout an economy.
O Because, in reality, the economy is very large, the simplicity of the circular-flow diagram makes it useless for the purposes of modeling
how dollars and resources move throughout an economy.
O Because it does not take into account the role of government, the circular-flow diagram is useless for the purposes of modeling how
dollars and resources move throughout an economy.
Transcribed Image Text: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 associated flow of inputs and outputs. Firms Markets for Goods and Services Markets for Factors of Production Households Which of the following statements regarding this economic model are true? O While simple, the circular-flow diagram can still be useful for the purposes of modeling how dollars and resources move throughout an economy. O Because it does not take into account international trade, the circular-flow diagram is useless for the purposes of modeling how dollars and resources move throughout an economy. O Because, in reality, the economy is very large, the simplicity of the circular-flow diagram makes it useless for the purposes of modeling how dollars and resources move throughout an economy. O Because it does not take into account the role of government, the circular-flow diagram is useless for the purposes of modeling how dollars and resources move throughout an economy.
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