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Questions and Answers
What is the main purpose of the circular flow model in an economic system?
What is the main purpose of the circular flow model in an economic system?
- To analyze the impact of government policies
- To monitor international trade
- To track the inflation rate
- To illustrate the flow of money, goods, and services (correct)
Why is the circular flow model also known as the circular flow of income?
Why is the circular flow model also known as the circular flow of income?
- Due to its focus on measuring sectoral profitability
- For its emphasis on government expenditure patterns
- As it highlights the movement of money in the economy (correct)
- Because it tracks consumer saving habits
In the circular flow model, what is tracked to measure a country's national income or GDP?
In the circular flow model, what is tracked to measure a country's national income or GDP?
- Movement of money between sectors (correct)
- Exchange rates between countries
- Consumer spending patterns
- Flows of goods and services
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