#1
In the circular flow model, households are primarily responsible for:
Producing goods and services
Consuming goods and services
Investing in capital goods
Regulating the economy
#2
Which sector of the economy represents businesses that produce goods and services?
Household sector
Government sector
Financial sector
Firm sector
#3
Which sector of the economy includes organizations such as banks and investment firms?
Household sector
Government sector
Financial sector
Firm sector
#4
Which of the following is NOT a factor of production in the circular flow model?
#5
What is the circular flow model primarily used for?
To measure the level of unemployment
To analyze the flow of goods, services, and money in an economy
To forecast future economic growth
To determine the level of inflation
#6
What role does the government sector play in the circular flow model?
Consuming goods and services
Regulating markets and providing public goods
Producing goods and services
Investing in capital goods
#7
Which component of the circular flow model represents the payments made by businesses to purchase resources like labor and capital?
Goods and services
Factor payments
Transfer payments
Taxes
#8
Which component of the circular flow model represents the value of all final goods and services produced within an economy in a given period?
Gross Domestic Product (GDP)
Net exports
Disposable income
Consumer price index (CPI)
#9
What happens to savings in the circular flow model?
They are invested by households in financial assets
They are consumed by households
They are used by businesses for production
They are taxed by the government
#10
In the circular flow model, what does the term 'factor market' refer to?
Market where goods and services are exchanged
Market where factors of production are bought and sold
Market where financial assets are traded
Market where government securities are auctioned
#11
In the circular flow model, which flow represents the movement of money from businesses to households in exchange for goods and services?
Goods and services flow
Resource flow
Money flow
Transfer flow
#12
What is the term used to describe the situation where total injections into the economy equal total leakages?
Equilibrium
Deficit
Inflation
Recession
#13
Which of the following represents an example of a leakage in the circular flow model?
Investment by businesses
Government expenditure on infrastructure
Household savings
Exports to foreign countries
#14
In the circular flow model, what is the relationship between saving and investment?
They are unrelated
Savings must equal investment for economic equilibrium
Savings always exceed investment
Investment always exceeds savings
#15
What is the term used to describe the situation where total leakages exceed total injections in the circular flow model?
Equilibrium
Surplus
Deficit
Stagnation