Circular Flow Diagram and Division of Labor

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What does the circular flow diagram represent?

The flow of money, goods, and services between households and firms in an economy

What is the division of labor and how does it enhance efficiency?

Allocating different tasks among workers to specialize in specific tasks, leading to increased productivity.

Define exports in the context of the economy.

Domestically produced goods and services sold in foreign markets.

Explain globalization with an example.

Increasing interconnectedness of markets across national borders.

What does productive efficiency mean?

Producing the maximum output with given resources.

How does the circular flow diagram illustrate the interconnectedness of the economy?

By showing the continuous flow of money, goods, and services between households and firms.

What is fiscal policy?

Government policies related to spending and taxation to influence the economy

Explain the goods and services market.

The marketplace where firms sell and households buy goods and services produced.

Define imports.

Products made abroad and sold domestically.

What does GDP measure?

Total production in an economy.

What is the labor market?

The market where households supply their labor to businesses or employers.

Explain market economy.

An economy where economic decisions are decentralized and businesses respond to demand.

Explore the concepts of the circular flow diagram and division of labor in an economy. Learn how households and firms interact to create interconnectedness, and how division of labor enhances efficiency in production.

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