4. The circular flow model The following diagram presents a circular flow model
ID: 1166368 • Letter: 4
Question
4. The circular flow model
The following diagram presents a circular flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in blue) shows the corresponding flow of inputs and outputs.
Based on this model, households earn incomes when purchase in the markets for inputs.
Suppose Kyoko earns $575 per week working as a programmer for PC Pros. She uses $9 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Jacques $250 per week to work the cash register. Jacques uses $225 to purchase software from PC Pros.
Identify whether each of the following events in this scenario occurs in the markets for inputs or the markets for outputs.
Event
Market for Inputs
Markets for Outputs
Which of the elements of this scenario represent a flow from a business to a household? This could be a flow of dollars, inputs, or outputs. Check all that apply.
The $225 Jacques spends to purchase software from PC Pros
The $250 per week Jacques earns working for Pillmart Pharmacy
The aspirin Kyoko receives
4. The circular flow model
The following diagram presents a circular flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in blue) shows the corresponding flow of inputs and outputs.
Based on this model, households earn incomes when purchase in the markets for inputs.
Suppose Kyoko earns $575 per week working as a programmer for PC Pros. She uses $9 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Jacques $250 per week to work the cash register. Jacques uses $225 to purchase software from PC Pros.
Identify whether each of the following events in this scenario occurs in the markets for inputs or the markets for outputs.
Event
Market for Inputs
Markets for Outputs
Jacques spends $225 to purchase software from PC Pros. Kyoko earns $575 per week working for PC Pros. Jacques earns $250 per week working for Pillmart Pharmacy.Which of the elements of this scenario represent a flow from a business to a household? This could be a flow of dollars, inputs, or outputs. Check all that apply.
The $225 Jacques spends to purchase software from PC Pros
The $250 per week Jacques earns working for Pillmart Pharmacy
The aspirin Kyoko receives
Markets for Outputs Sales receipts Expenditures Go Goods and services ces Households Businesses , capital, etc Incomes Capital, etc Labor, capital, e Markets for Inputs Wages, interestExplanation / Answer
Jacques spend $ 225 to purchase software from PC pros: Since, Jacques is buying a product hence this will go to Market for Outputs. Here the flow of money is from Household to Firm.
Kyoko earns $ 575 per week working for PC pros: as Kyoko is providing his services to PC pros therefore this will go to Market for inputs. In exchange of Labor household is earning income from companies. The flow of money is from Firm to Household.
Jacques earns $ 250 per week working for Pilmart Pharmacy. Here Jacques is working for company and in exchange of his labor he is earning an income. This will go to market of input. Household is providing labor to firms. The flow of money is from Firm to House hold.
2.
Jacques spends to buy software from PC pros. Thus the money goes from Household to Firm. In exchange of money the company provide service to Jacques.
The $225 per week Jacques earns working for Pillmart Pharmacy. Here Jacques that is household is earning income from market of inputs. The flow of money is from Business to Household. Household provide human resource to Business.
The aspirin Kyoko receives. The occurs in the market of output here the Business give good or service to Household. Flow of good or service is from Business to Household.
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