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Circular Flow Model | Definition & Examples

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Circular Flow Model | Definition & Examples

Learn the definition and significance of the circular flow model in economics and how it applies to real life. Understand and be able to apply the circular flow diagram and chart.

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The circular-flow model The following diagram presents the 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 corresponding flow of inputs and outputs. Markets for Goods and Services Firms Households Markets for Factors of Production Based on this model, households earn income when they purchase inputs in markets for factors of production. Suppose Alyssa earns 5600 per week working as a

The circular-flow model The following diagram presents the 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 corresponding flow of inputs and outputs. Markets for Goods and Services Firms Households Markets for Factors of Production Based on this model, households earn income when they purchase inputs in markets for factors of production. Suppose Alyssa earns 5600 per week working as a

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The circular-flow model The following diagram presents the 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 corresponding flow of inputs and outputs. Markets for Goods and Services Firms Households Markets for Factors of Production Based on this model, households earn income when they purchase inputs in markets for factors of production. Suppose Alyssa earns 5600 per week working as a

The circular-flow model The following diagram presents the cir…

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Draw a circular-flow diagram. Identify the parts of the model that correspond to the flow of goods and services and the flow of dollars for each of the following activities. a. Selena pays a storekeeper 1 for a quart of milk. b. Stuart earns 8 per hour working at a fast-food restaurant. c. Shanna spends 40 to get a haircut. S. Salma earns 20,000 from her 10 percent ownership of Acme Industrial. | Numerade

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