In the Circular Flow Model for an Economy That Produces

question 105

Multiple Choice

In the circular flow model for an economy that produces only consumption goods,

• A)factor incomes flow from households to firms.
• B)factors of production flow from firms to households.
• C)expenditures on output flow from firms to households.
• D)factors of production flow from households to firms.

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Definitions:

Feelings of Inequity

Emotional responses that arise when an individual perceives an imbalance or unfairness in their work environment, especially in terms of rewards and contributions.

Overreward Inequity

A situation where an individual perceives they are getting more rewards than they believe they deserve compared to others.

Frustration-Regression

A psychological phenomenon observed in goal-oriented behavior, where an individual facing obstacles regresses to less mature behaviors or simpler strategies in order to deal with frustration.

Equity Theory

A theory in social psychology that explains how individuals perceive fairness in distribution of resources within interpersonal relationships, leading to satisfaction or dissatisfaction.