The Circular Flow of Income Model Shows

question 83

Multiple Choice

The circular flow of income model shows:

• A)the flow of output and income within one sector of the economy.
• B)how different sectors of the economy are linked together.
• C)that income is rarely equal to output.
• D)how business firms interact with one another.
• E)how businesses sell their resource services to households.

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Definitions:

Absolute Poverty

A condition where individuals lack the basic means of survival, such as food, clean water, and shelter.

Relative Poverty

A condition where individuals lack the minimum amount of income needed in comparison to the average standard of living in their society.

Minimum-Wage Jobs

Positions that pay the lowest legal hourly rate employers are permitted to pay workers, often in unskilled or service-oriented fields.

Low-Income Cutoff

Is Statistic Canada’s term for the income threshold below which a family devotes at least 20 percent more of its income to the necessities of food, shelter, and clothing than does an average family.