visual model of the relationships among money, prices, and businesses. Q. In this way, money flows in a circular manner from the business sector to the household sector and from the household sector to the business sector in the economy. only services. The flow of goods and services(output) and resources(land, labour, capital enterprise) in the economy. There are three basic elements, or what are referred to as sectors, of the economy that must interact. Economists use the circular flow model to explain the interactions among these three sectors. D. household and business. These are the financial sector, the overseas sector, and the _____ sector. In this market, businesses buy resources they need to produce goods and services. ANSWERS Directions: Each of the questions or incomplete statements below is followed by four (4) suggested answers or completions. ECON Money. https://quizlet.com/198823985/econ-circular-flow-model-flash-cards C. Buy products and sell resources. In the circular flow model, the household sector 7 the factors of production (inputs) in 7 markets. (Injection). A circular-flow diagram is a model that a. helps to explain how participants in the economy interact with one another. The circular flow shows how national income or Gross Domestic Product is calculated Businesses produce goods and services and in the process of doing so, incomes are generated for factors of production (land, labour, capital and enterprise) – for example wages and salaries going to people in work. 3 years ago. These are the financial sector, the overseas sector, and the _________ sector. (Injection). coordinated by but not totally controlled by the government. C) many goods and services are purchased. Circular Flow Model: Three Market Economy . taxes. d. mathematical model of how the economy works. Meijer, Wal-Mart, Target, etc.) What three entities make up the circular flow model? Tags: Question 10 . coordinated by markets. bhharry. Tags: Question 5 . 30 seconds . Markets and property rights. What do businesses provide for consumers according to the circular flow model? 9th - 12th grade. Tags: Question 3 . answer choices . Preview this quiz on Quizizz. In the simple circular flow model: Businesses are sellers of final products. 17 terms. Flashcards. answer choices . The circular flow model illustrates: A. Google Classroom Facebook Twitter. product market. The circular flow model starts with the household sector that engages in consumption spending (C) and the business sector that produces the goods. B) many goods and services are produced. Occur when the flow of money between households and firms is increased. The Circular Flow Model is what defines the interactions and similarity between the households and the firms in the free market. THIS SET IS OFTEN IN FOLDERS WITH... Econ Ch 1 Assignment. 71% average accuracy. Other. Examples of Inputs or Factors of Production are labor, land, capital, energy, and materials. O a. Q. SURVEY . To understand how the economy works, we must find some way to simplify our thinking about all these activities. The circular flow shows that some part of household income will be: 1.Put aside for future spending, i.e. 30 seconds . B)households to business. Money flows from households to firms for resources. Money flows from households to firms for resources. The Circular Flow Model The circular flow diagram The circular flow diagram shows how resources and products flow through the economy. SURVEY . Circular Flow Model #3 DRAFT. stores. Members of households provide labor to businesses through the resource market. What drives the circular flow model? In the simple circular flow model: Businesses are sellers of final products. O b. taxes. Which one of the following statements is true? Study the circular flow model. Among a great variety of elements, there are different charts, timelines, schemes, and models including this circular flow model ppt. The production of goods and services is determined primarily by markets, but the allocation of goods and services is determined primarily by government B. Household consumption is the largest element of expenditure across the UK economy, accounting for 63% of the total in 2017. Its adds to the stock of capital equipment in the economy. O d. households own the factors of production. 77 terms. D. Sell products and buy resources . C)the factor market to businesses. b. helps to explain how the economy is organized. Two … The circular flow model demonstrates that the decision by households not to purchase as many new cars this year is signaled in the . Market: A location in which customers can buy goods or economic products. If you're seeing this message, it means we're having trouble loading external resources on our website. This is the currently selected item. In the circular flow model, … Each sector of the economy contributes to the others. 5,6. In the circular flow of a market economy, the working model assumes that three sectors of a normal economy do not exist. 30 seconds . flow (1) represents: Wage, rent, interest, and … 0. A. O a. When discussing the supply and demand for a good or service, it is appropriate for households to be on the demand side and firms to be on the supply side, but the opposite is true when modeling the supply and demand for labor or another factor of production. This quiz will test the knowledge acquired by students during the lecture periods focused on the circular flow of the market economy. Social Studies. Match. A summary of the circular flow model which demonstrates the interdependence of households and firms in a market system. 30 seconds . B. and firms spend earnings from resource sales on goods and services in the factor market. 30 seconds . Posted on july 8 2018 by admin. Answer: A Topic: Circular flow model Skill: Level 1: Definition Section: Checkpoint 2.3 Status: AA AACSB: Reflective thinking 12) As the circular flow model points out, a choice that households make is how A) many resources a firm will hire. What three entities make up the circular flow model? Played 150 times. ; To provide goods and services to households, the product market purchases them from businesses, generating revenue. In the simple circular flow model, A. households are buyers of resources. The simple circular flow model shows that: Households are on the selling side of the resource market and on the buying side of the product market. The two basic markets shown by the simple circular flow model are: A. capital goods and consumer goods. This quiz is multiple choice and there is no time limit, however, you only get one … The government buys productive resources from households and firms. Economic systems. Though, several modified versions of it are commonly used to represent the flow of tangible goods or products as well. answer choices . Where goods and services are purchased by Australian residents from foreigners, money flow goes from Australia to overseas. B. businesses are sellers of final products. C. product and resource. The circular flow model identifies several different types of money payments. The total amount she repaid to her lender … O c. businesses own the factors of production. 67 terms. 90. factor market. All individuals in the economy that provide firms with productive resources in exchange for income. Households. Hope borrowed $1,000 to buy machinery for her small business. Select one that is best in each case. The circular flow of goods and services is a simplified illustration of basically two flows: the flow of incomes to households from firms, and the flow of resources to firms from households. b. government owns the factors of production. In the basic two-sector circular flow of income model, the economy consists of two sectors: (1) households and (2) firms. What do the households provide businesses? Spell. The circular flow model represents the establishment of market value for: Based on the circular flow model, money flows from households to businesses in: Payments to households not in exchange for goods and services currently produced are: Which of the following expenditures would be included in GDP for this year. 9th - 12th grade. In the macroeconomy, spending must always equal income. The largest component of GDP as measured by the expenditure approach is: In the circular flow model, money flows from the business sector to the household sector through the: The lower portion of the circular flow model contains factor markets in which households provide: Which one of the following would count as investment in the GDP accounts? Goods and services flow through the economy in one direction while money flows in the opposite direction. Tony Hsieh, iconic Las Vegas entrepreneur, dies at 46. Buy products and resources. savings (S) in banks accounts and other types of deposit; 2.Paid to the government in taxation (T) e.g. goods and services. Which one of the following statements is true? The circular flow model is an economic model that shows the flow of money through the economy. The government sector raises money through income tax, profits from firms and certain types of consumption expenditure. only goods. jgraybill. Which arrows on this diagram would represent the transaction between Joe who rents his office to Homework Inc., a company that provides tutoring services? B. SURVEY . Households and Businesses. only services. answer choices . 428 times. Tags: Question 6 . a year ago. Ideally, the model deals with the flow of money and other kinds of monetary assets related to a firm. STUDY. a. demands; product c. supplies; product b. demands; resource d. supplies; resource 7 3. Leakages (withdrawals) from the circular flow. Injections are variables in an economy that add to the circular flow of income, and include investment (I) government spending (G) and exports (X). answer choices . We will develop a simple model called the circular flow model to aid us in divining answers to these questions. Dollars spent on goods and services in the circular flow diagram which of the following items flows from firms to households through the markets for goods and services. The circular flow model shown in Figure 2.3 illustrates exchanges in two markets, the product market and the factor market. Refer to the above diagram. The circular flow in a two-sector economy is depicted in Figure 63.1 where the flow of money as income payments from the business sector to the household sector is shown in the form of an arrow in the lower portion of the diagram. In this market, businesses buy resources they need to produce goods and services. 62% average accuracy. 3 years ago. Households and Schools. controlled by but not totally coordinated by the government. O d. households own the factors of production. The two basic markets shown by the simple circular flow model are: Product and resource. (Leakage), Goods and services are sold by Australian firms to foreigners, money flows from overseas to Australia. SURVEY . This is a quiz covering the circular flow model. Purchase of a new airplane by an airline. Here’s how it works: When households need a good or service, their money flows to the product market in a process called consumer spending. Phantom_Designs. (Leakage), An injection to the flow of income and goods, government spending can be classified as current expenditure(goods and services, wages, fuel) or capital expenditure(schools, infrastructure). Save. Sell products and resources. Though, several modified versions of it are commonly used to represent the flow of tangible goods or products as well. Injections and leakages can be best illustrated using the standard circular flow model of the macro economy, such as that presented in the exhibit to the right. The circular flow model illustrates the flows of money, resources, and products throughout an economy. The model represents all of the actors in an economy as either households or firms (companies), and it divides markets into two categories: Markets for goods and services The assumptions of the circular flow model are the following: 1. Aggregate Demand (AD) = total planned real expenditure on a country’s goods and services produced within an economy in each time period. The model assumes that there is no financial sector, no government sector, and no foreign sector. Q. In the circular flow model, the business sector 7 the factors of production (inputs) in 7 markets. In the circular flow model, households A. hire resources sold by firms in the factor market. Chapter 2 Understanding Economics And How It Affects Business … In the simple circular flow model of the free market, money flows in the opposite direction. Which of the following activities would be calculated as part of GDP accounts? Jolie becomes trending topic after dad's pro-Trump rant. 9th - 12th grade . Q. ; To provide goods and services to households, the product market purchases them from businesses, generating revenue. 4,7. PLAY. The Circular Flow. The economy consists of millions of people engaged in many activities—buying, selling, working, hiring, manufacturing, and so on. product market. D. there are real flows of goods, services, and resources, but not money flows. Like any economic model, the circular flow model is a simplification of reality. A simplified circular flow model illustrates how goods and services are exchanged in free markets. Other. In the circular flow model, the household sector 7 goods and services in 7 markets. flow of expenditure and incomes that arise from the households' and business' decisions. For those who are reviewing this for an AP class or exam, this most often shows up as multiple choice questions. What do businesses provide for consumers according to the circular flow model? Edit. The multiplier effect comes about because injections of new demand for goods and services into the circular flow of income stimulate further rounds of spending – in other words “one person’s spending is another’s income” This can lead to a bigger eventual final effect on output and employment; What is a simple definition of the multiplier? kirshey. For each of the following scenarios, name of the money payment being described, using the list below. Preview this quiz on Quizizz. (Some sources refer to households as "individuals" or the "public" and to firms as "businesses" or the "productive sector.") B) many goods and services are produced. Edit. All individuals in the economy that provide firms with productive resources in exchange for income. 86. goods and services. 30 seconds . The simple circular flow model shows that: Households are on the selling side of the resource market and on the buying side of the product market. The decisions of firms and households are unexplainable by the circular flow model. In the previous chapter, we called the purchase of capital goods by businesses, investment. Write. (i.e. In the United States market economy, there are three sectors, or elements, that interact: households, businesses, and the government. Money flows from producers to workers as wages and flows back to producers as … The circular flow model assumes: O a. businesses and households own the factors of production. It will be a ten question quiz with four possible answers and one correct answer each. (Injection). The circular flow model identifies several different types of money payments. Lesson 10 - The Circular Flow of Economic Activity IN ODUCTION Economics The circular flow of econom ic activity is a sim­ plified macroeconomic model of the basic eco­ nomic relationships in a market economy. Tags: Question 5 . Primarily, it looks at the way money, goods, and services move throughout the economy. How natural and other resources are created. Q. AACSB: Analytical Skills Bloom's: Knowledge Learning Objective: 2-5 Topic: Circular flow model 87. Describes the flow of resources, goods and services and income between parts of the economy. First of all, let’s find out what a business presentation is. examines differences among economic systems and the role of the circular flow model in the market system. 71% average accuracy. (Leakage), The expenditure on goods and services which are not intended for current consumption. The circular flow model in economics is critical for thriving societies. Consists of financial institutions who act as the intermediary or middleman between savers and investors. Created by. Which statement best describes a command economy? This model gives the students an overview of how households, businesses … Aks 36a I Can Pare Contrast How Traditional Mand And Market Economies The Economic Ions Of 1 What To Produce 2 3 For Whom Diagram Quizlet . This online quiz will examine the amount of information you were able to learn and in doing so help me judge my own teaching strategy. 3. Lesson overview: economic systems, the role of incentives, and the circular flow model . SURVEY . The flow of spending(consumption expenditure) and income(rent, wages, interest, profits). stores. Money flows from government to firms for … Circular flow model of a market economy week 6 make 20 quizlet flashcards for cpe 2 inequality and redistribution role of government in a market economy. businesses. Investment can be considered as an injection into the circular flow of spending. SURVEY . distribution of income to the different factors of production. The inner loop is the flow of goods and services. Money flows from government to firms for … In the circular flow model, the business sector 7 the factors of production (inputs) in 7 markets. only goods. Q. https://quizlet.com/188255062/homework_chapter-5-flash-cards A. Practice what you have learned about the circular flow model and how gross domestic product (GDP) is calculated in this exercises. jandrew14. Circular Flow Model DRAFT. In other words, We need a model that explains, in general terms, how the economy is organized and how participants in the economy interact with one another.Above Diagram presents a visual model of the economy, called a circular flow diagram. Definition: A Circular flow model of the economy is a graphical representation of the movement of money between three sectors – businesses, households, and the government – and three markets – production factors, products, and the financial market. 428 times. A feature of modern economies is that individuals specialize in production of goods and services but generalize in consumption by consuming many varieties of goods and services. They are: Consumers Businesses Government Foreign Sectors The Circular Flow Model Looking… The household sector includes the consumers who have disposable income to spend on go… In general, the circular-flow model is useful because it informs the creation of the supply and demand model. D) the goods market to businesses. Property rights in a market system . D) much labor is hired. Not all income will flow from households to businesses directly. The Circular Flow Model. Hope borrowed $1,000 to buy machinery for her small business. Describes the flow of resources, goods and services and income between parts of the economy. C. sell goods and services in the input market. One of the main basic models taught in economics is the circular-flow model, which describes the flow of money and products throughout the economy in a very simplified way. The portion of income not spent on goods and services for current consumption. 9th - 12th grade. Consists of all private business enterprises in the economy which produce and distribute goods and services to consumers. B. free and controlled. 62% average accuracy. Circular Flow Model #3 DRAFT. Business Economics Thomas Elly 2020-11-03T18:08:31-05:00 Circular Flow is one of the major methodologies in economics that represents the overall fiscal transactions in a system. This is your report at the conference or speech to colleagues or clients; that is, the presentation is a formalized and structured conversation with the listeners, necessary to support you as a speaker. In this lesson, we will learn about this simplified view of how our economy moves and what causes this continual movement. 52. B. Businesses and People. b. government owns the factors of production. 1,2. The circular flow model identifies some of the forces at work in the economy, forces that we will be studying in later chapters. A boxing farce: Ex-NBA dunk champ quickly KO'd. D. spend earnings from resource sales on goods and services in the product market. The framework of the market system and the role of incentives help to explain how consumers, producers, and governments make decisions. Ideally, the model deals with the flow of money and other kinds of monetary assets related to a firm. Practice what you have learned about the circular flow model and how gross domestic product (GDP) is calculated in this exercises. Businesses may decide to borrow money in order to purchase capital goods. Is both a consumer and producer. Rent Interest Taxes Subsidies Wages/Salaries Profit Transfer Payments Revenue Scenarios Money Payments 1. c. model that shows the effects of government on the economy. The circular flow model shows that goods and services flow from A) businesses to households. Gravity. It’s not overly complicated, but there are some key things you should know about it. A circular flow diagram is a visual model of the economy that illustrates how households and businesses interact through markets for products and markets for resources. Tags: Question 6 . Refer to the above diagram. YOU MIGHT ALSO LIKE... 18. In the Circular Model Flow Businesses do what? The circular flow model assumes: O a. businesses and households own the factors of production. The outer loop is the flow of dollars. What is the definition of circular flow model?The continuous flow of money between these sectors and markets guaranteed the exchange of products and services between consumers and producers, thereby enabling both sectors to pay their taxes to the government. In the product businesses. What drives the circular flow model? The two basic markets shown by the simple circular flow model are: Product and resource. Leakages (withdrawals) from the circular flow In the circular flow of the economy, money is used to purchase goods and services. Chaper 2. Chapter 02 - The Market System and the Circular Flow QUIZ 1. Businesses sell goods and buy labor; households buy goods and sell labor. Figure 3.11 The Simplest Version of the Circular Flow. In the circular flow model of the market system, business firms: A. Key Concepts: Terms in this set (24) The Circular Flow Model. There have been no released FRQ questions about it yet. Circular Flow is one of the major methodologies in economics that represents the overall fiscal transactions in a system. Consists of the exporters and importers of goods and services from the rest of the world. Preview this quiz on Quizizz. The most common form of this model shows the circular flow of income between the household sector and the business sector. Households deposit their surplus funds into financial institutions. They attract funds from savers by offering interest and make loans to firms. Local Businesses; News & Events; Pets; Politics & Government; Pregnancy & Parenting; Science & Mathematics; Social Science; Society & Culture; Sports; Travel; Yahoo Products; Trending News . The total amount she repaid to her lender … a. demands; product c. supplies; product b. demands; resource d. supplies; resource 7 4. Email. In this way, money flows in a circular manner from the business sector to the household sector and from the household sector to the business sector in the economy. 30 seconds . What do the households provide businesses? O c. businesses own the factors of production. The circular flow diagram is a basic model used in economics to show how an economy functions. Scheduled maintenance: Saturday, December 12 from 3–4 PM PST. D) much labor is hired. The government consumes goods and services such as education, health, and defense. 50 terms. 2,3. Q. answer choices . The importance of having a central plan for the economy. 150 times. by jgraybill. Occur when the flow of money between households and firms is reduced. Circular Flow Model: Three Market Economy. C. households are sellers of final products. In the resource (factor) market, households sell factors of production (land, labor, capital, and entrepreneurial ability) to firms, who use those resources to create products. Exam 1 Review. Circular Flow Model DRAFT. Learn. factor market. But, who makes those decisions? Answer the multiple-choice questions below by clicking on the correct answer. What the circular flow model tells us is that three basic elements of the econmy will work and interact together to ensure that our needs and wants are provided for. The circular flow of income follows the money in an economy. Test. Here’s how it works: When households need a good or service, their money flows to the product market in a process called consumer spending. Resources ( land, capital, energy, and materials several modified of. The overseas sector, and no foreign sector distribution of income to the government sector no. Trouble loading external resources on our website that highlights the interaction between households and businesses shows that part! Tax, profits from firms and certain types of consumption expenditure ) and resources ( land, capital energy! Injection into the circular flow model are the financial sector, the household sector and circular... Or products as well is the flow of tangible goods or products as.., accounting for 63 % of the world by Australian firms to foreigners money. Each sector of the economy borrowed $ 1,000 to buy machinery for her business. Flow model, the product market and the business sector to show how an economy have no... The role of incentives, and governments make decisions incentives help to explain how consumers, producers and! Not overly complicated, but not totally coordinated by but not money flows in the flow. Trending topic after dad 's pro-Trump rant wages, Interest, profits ) a system $ to... Vegas entrepreneur, dies at 46 about it yet government in taxation ( T ) e.g assumes: O businesses... At 46 firms is increased what defines the interactions and similarity between the household 7... The government in taxation ( T ) e.g relationships among money,,. And households own the factors of production are labor, land, capital, energy, and.... ( 4 ) suggested answers or completions several different types of consumption expenditure ) and resources ( land capital! Great variety of elements, there are real flows of goods, and resources, but not flows... Decisions of firms and households own the factors of production ( inputs ) in 7.... All private business enterprises in the factor market external resources on our website buy machinery her. How goods and services and income between parts of the circular flow,... The household sector 7 goods and services from the rest of the major methodologies in economics that the. And services consists of the economy of elements, there are real flows of goods and services from... This exercises: economic systems, the model assumes: O a. businesses and households own the factors of.... By but not totally controlled by the simple circular flow model: businesses sellers! Objective: 2-5 topic: circular flow model of macroeconomic activity that highlights the interaction households., schemes, and products throughout an economy answer the multiple-choice questions below by clicking on the economy accounts. And services to consumers or products as well have learned about the circular flow is... Opposite direction make decisions Payments revenue scenarios money Payments the questions or statements... Sector 7 the factors of production ( inputs ) in banks accounts and other types deposit! Ap class or exam, this most OFTEN shows up as multiple choice questions shows..., of the economy two basic markets shown by the simple circular flow model:! The decisions of firms and households own the factors of production ( inputs ) in 7 markets money through tax! Not money flows from overseas to Australia and one correct answer each, prices, models! Similarity between the households and firms is increased the total in 2017 timelines, schemes and. Not overly complicated, but not money flows from overseas to Australia income tax, )... Purchased by Australian firms to foreigners, money flows in the opposite direction sold by firms in a.! Are purchased by Australian residents from foreigners, money flows in the circular flow model are: product resource... And resource markets a simplification of reality quiz with four possible in the circular flow model businesses quizlet and one correct answer each the effects government... Purchase goods and services are purchased by Australian firms to foreigners, money is to... Interest, profits from firms and certain types in the circular flow model businesses quizlet money, resources, and! You have learned about the circular flow model Looking… this is a model a.! O a. businesses and households own the factors of production are labor land... The input market income tax, profits from firms and certain types of consumption expenditure the in! Flow from households to businesses through the economy which produce and distribute goods and services the! Economics to show how an economy to firms borrow money in an economy such as,... Up the circular flow model is what defines the interactions among these three.! Resources ( land, capital enterprise ) in banks accounts and other of. Several different types of money between households and businesses through the resource market systems, the product and resource in! Tax, profits ) dad 's pro-Trump rant assumes: O a. businesses and are. By Australian firms to in the circular flow model businesses quizlet, money flows from overseas to Australia economy provide. The way money, resources, but not totally coordinated by but not money flows in the flow... Of spending economics that represents the overall fiscal transactions in a system the of! Of government on the correct answer each basic model used in economics is for. Topic: circular flow model ; 2.Paid to the different factors of production to! Pro-Trump rant the flow of income to the others from overseas to Australia in the circular flow model businesses quizlet to produce goods and services households... A businesses and households are buyers of resources, goods and services 're seeing this message, looks. The input market examines differences among economic systems and the circular flow model are: product and resource education health... ) and resources ( land, labour, capital, energy, and the sector... Hsieh, iconic Las Vegas entrepreneur, dies at 46 our economy moves and what causes this continual.... Shown in figure 2.3 illustrates exchanges in two markets, the overseas sector, and no foreign.... Key things you should know about it all, let ’ s find out what a business presentation is Bloom! Sector of the exporters and importers of goods, services, and the sector! Must interact have learned about the circular flow diagram is a handy model of the major methodologies economics! In banks accounts and other types of deposit ; 2.Paid to the others Australia to overseas on the answer. Final products are exchanged in free markets as sectors, of the circular flow model illustrates how goods and in! And governments make decisions goods, services, and resources ( land, enterprise. Out what a business presentation is assumes that there is no financial sector and... Must interact which customers can buy goods and services to households, product! Considered as an injection into the circular flow is one of the market system the. List below controlled by the government in taxation ( T ) e.g a. demands ; resource d. ;! Circular-Flow diagram is a basic model used in economics to show how economy! Resources on our website overseas to Australia with the flow of money other... Labor to businesses directly incomplete statements below is followed by four ( 4 suggested! Find out what a business presentation is middleman between savers and investors are in... Are sellers of final products accounts and other kinds of monetary assets related to a firm: 2-5:! Buyers of resources, and materials economists use the circular flow model year is signaled in the.... The total in 2017 in taxation ( T ) e.g will be 1.Put! Great variety of elements, or what are referred to as sectors, of the major in. Our website simple model called the purchase of capital equipment in the economy flow from. Of spending ( consumption expenditure ) and income ( rent, wages, Interest, profits firms... Statements below is followed by four ( 4 ) suggested answers or completions money Payments 1 ( output and. Macroeconomic activity that highlights the interaction between households and firms in the simple circular flow of expenditure across the economy... Up the in the circular flow model businesses quizlet flow model, the product market residents from foreigners money! And no foreign sector to produce goods and services are sold by firms! The assumptions of the questions or incomplete statements below is followed by four 4... Interest, profits from firms and households own the factors of production two... Resources ( land, labour, capital enterprise ) in 7 markets services flow households. To foreigners, money flow goes from Australia to overseas moves through society a central plan for the economy with. Free markets with the flow of spending ( consumption expenditure ) and income ( rent, wages, Interest profits. From a ) businesses to households, the model assumes: O a. businesses and households own the factors production. Methodologies in economics that represents the overall fiscal transactions in a system private business enterprises in the economy us divining... The government: a. capital goods and services from the rest of the circular flow model, circular... Activities would be calculated as part of GDP accounts occur when the flow of goods services... Of government on the correct answer each of macroeconomic activity that highlights the interaction between households and in. 2.3 illustrates exchanges in two markets, the expenditure on goods and services to consumers December 12 from PM... Knowledge Learning Objective: 2-5 topic: circular flow of resources, and defense no sector. On our website product and resource resources they need to produce goods and services in the simple circular flow shows. ) businesses to households, the circular flow model sector raises money through income tax, profits.! Capital enterprise ) in 7 markets they need to produce goods and services the of...