Circular Flow Model
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Questions and Answers

What is the primary purpose of the circular flow model?

  • To predict the future growth of a country's economy
  • To understand how money moves within an economy (correct)
  • To analyze the effects of government policies on the economy
  • To understand the behavior of individual consumers
  • What is the main way the circular flow model divides the economy?

  • Into different geographic regions
  • Into different industries and sectors
  • Into participants and indicate how they engage in economic activities (correct)
  • Into different economic systems, such as capitalist and socialist
  • What is included in the activities of the circular flow model?

  • Only the production and spending of goods and services
  • The study of international trade and finance
  • The analysis of economic growth and development
  • The movement of income, production, and spending between role players (correct)
  • What is the main benefit of using the circular flow model?

    <p>It allows us to analyze the economy as a whole system</p> Signup and view all the answers

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

    <p>They engage in economic activities with each other</p> Signup and view all the answers

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