Describe the basic features of the circular flow diagram
Please provide the best answer for the statement.
In the simple circular flow diagram, there are two decision-makers: households and businesses. These two groups are related through the resource and product markets. In the upper part of the circular flow, households sell economic resources (land, labor, capital, entrepreneurial ability) and businesses buy resources through the resource market. Businesses pay for the cost of these resources, which in turn becomes money income for households. It is the supply decisions of resources sellers (households) and the buying decisions of businesses that determine prices and employment in the resource market.
In the lower part of the circular flow, businesses sell goods and services and households buy goods and services in the product market. Households pay for these goods and services with the money income they received from providing resources. These consumption expenditures become revenue for businesses. It is the product buying decisions of households and the product selling decisions of businesses that determine prices and output in the product market.
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If the minimum wage law is repealed and employers begin using efficiency wages far less frequently, it would ___ unemployment and ____ the natural rate of unemployment: a. Increase; increase
b. Increase; not change. c. Decrease; decrease. d. Decrease; not change.
A government surplus has the effect of :
a. Increasing the demand for real loanable funds, increasing the real risk-free interest rate, and increasing the quantity supplied of real loanable funds per period. b. Increasing the supply of real loanable funds, reducing the real risk-free interest rate, and increasing the demand for real loanable funds. c. Decreasing the supply of real loanable funds, increasing the real risk-free interest rate, and decreasing the quantity demanded of real loanable funds per period. d. Decreasing the supply of real loanable funds, increasing the real risk-free interest rate, and decreasing the demand for real loanable funds per period. e. Increasing the supply of real loanable funds, reducing the real risk-free interest rate, and increasing the quantity demanded of real loanable funds per period.
Law of supply
What will be an ideal response?
Which of the following generates demand for foreign currencies?
A. The building of plants by foreign corporations in the United States. B. Exports from the United States to foreign countries. C. Foreign tourists traveling to the United States. D. Imports of foreign goods by firms located in the United States.