Macro 7.1 Circular Flow of Income Flashcards
1
Q
What does the simple circular flow model assume?
A
there are only two economci agents :
-households -firms
2
Q
What does the simple CFM pretend that don’t exist
A
Government
Foreign Trade
3
Q
What is this model of (like wwhat type is )
A
model of a two sector economy/closed economy with no government sector
4
Q
What do the dashed flow lines represent
A
real flows occuring in the economy between households and firm
5
Q
What do households supply and in exchange for what
A
labour and other factors of production
in exchange for
goods and services produced by firms
6
Q
What do real flows do
A
generate money flows of income and expenditure
7
Q
What are the real flows shown by
A
the solid flow lines
