Circular Flow Model

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What is the primary purpose of the circular flow model?

To understand how money moves within an economy

What is the main way the circular flow model divides the economy?

Into participants and indicate how they engage in economic activities

What is included in the activities of the circular flow model?

The movement of income, production, and spending between role players

What is the main benefit of using the circular flow model?

It allows us to analyze the economy as a whole system

What is the relationship between the participants in the circular flow model?

They engage in economic activities with each other

Understand the circular flow model, a fundamental concept in economics that illustrates the flow of income, production, and spending between different sectors of the economy. Learn how the model divides the economy into participants and highlights their economic activities. Test your knowledge of the circular flow model and its purpose.

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