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Questions and Answers
Which of the following best describes the circular flow model?
Which of the following best describes the circular flow model?
- A model that displays the interaction between decision makers and the economy
- A model that illustrates the impact of government policies on the economy
- A model that demonstrates the circular flow of expenditures and income (correct)
- A model that shows the flow of goods and services in the economy
What does the circular flow model help determine?
What does the circular flow model help determine?
- The prices of goods and services
- The amount of savings in the economy
- The impact of technological advancements on production
- The distribution of income among households (correct)
What is the purpose of the circular flow model?
What is the purpose of the circular flow model?
- To showcase the impact of international trade on the economy
- To highlight the role of government in regulating the economy
- To illustrate the flow of expenditures and income in the economy (correct)
- To demonstrate the impact of inflation on consumer spending
