The Circular Flow of Income: Definition & Model

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Who earns money and spends their income on goods and services?

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1. What is the role of firms in the circular flow of income?

2. What is an expenditure?

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About This Quiz & Worksheet

This quiz/worksheet combo will gauge your knowledge of a circular flow of income and the model that explains it.

Quiz & Worksheet Goals

In these assessments, you will become aware of what you know about the following:

  • The role of firms in the circular flow of income
  • A definition of expenditure
  • What saved money is considered to be in a circular flow of income

Skills Practiced

  • Information recall - access the knowledge you've gained regarding the role of firms in the circular flow of income and their relationship with capital, labor, and people to keep money flowing
  • Knowledge application use your knowledge to answer questions about the definition of expenditure and what it does to keep the economy thriving
  • Interpreting information - verify you can read information regarding how saved money affects the circular flow of income and interpret it correctly

Additional Learning

Keep reading information about the circular flow of income by reviewing the lesson called The Circular Flow of Income: Definition and Model. The lesson will cover the following areas:

  • A basic look at circular flow of income
  • Circular flow of income defined
  • The role of households and firms in a circular flow of income model
  • An example of a circular flow of income
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