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In the circular flow model what generates demand for goods and service?
production
What determines the magnitude of circular flow of income and expenditures?
Aggregate demand
What way do businesses and households both supply and demand in the circular flow model?
Households are made up of individuals who both spend money and are the recipients of money. Businesses do the same.
In the circular flow model, households supply firms with which of these items?
labor, capital, and resources
In the circular flow model households supply firms with which items?
Labor, capitital, and raw materials.
Simple circular flow model shows that?
A simple circular flow model shows the flow of goods and services through the economy. It is basically a model that shows supply and demand in an economy.
In the circular flow model what generates demand for goods and service?
production
What determines the magnitude of circular flow of income and expenditures?
Aggregate demand
In what way do businesses and households both supply and demand in circular flow model?
Households are made up of individuals who both spend money and are the recipients of money. Businesses do the same.
What way do businesses and households both supply and demand in the circular flow model?
Households are made up of individuals who both spend money and are the recipients of money. Businesses do the same.
In the circular flow model, households supply firms with which of these items?
labor, capital, and resources
In the circular flow model households supply firms with which items?
Labor, capitital, and raw materials.
What are the leakages from the circular flow?
You have leakages from your circular flow.
What does an increase in money supply do to the AD curve?
An increase in the money supply means that more money is entering the circular flow of income; these two things are one and the same. More money being in the circular flow of income will increase demand in the economy as people within it have more money to spend. However, this pressumes that during this circular multiplier process no money is leaked from the economy; someone within the circle may choose to save some of it. This will eventually result in the AD curve being shifted to the right, showing an increase in income (y) and an increase in price (p).
What is the role for consumers and producers in a free market system?
A circular flow model
Why is circular flow model only a theory?
since there will be leakages from the circular flow
Why is the circular flow model only a theory?
since there will be leakages from the circular flow
