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.

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter2: Thinking Like An Economist
Section: Chapter Questions
Problem 1PA
icon
Related questions
Question
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.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Production Possibility Frontier
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Brief Principles of Macroeconomics (MindTap Cours…
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Economics (MindTap Course List)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Macroeconomics
Macroeconomics
Economics
ISBN:
9781337617390
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Microeconomics
Microeconomics
Economics
ISBN:
9781337617406
Author:
Roger A. Arnold
Publisher:
Cengage Learning