The Circular Flow Model Shows That Goods and Services Flow

question 10

Multiple Choice

The circular flow model shows that goods and services flow from

• A) businesses to households.
• B) households to business.
• C) the factor market to businesses.
• D) the goods market to businesses.
• E) the factor markets to the goods markets.

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Definitions:

Price Level

An overall mean of the current prices for goods and services in the economic territory.

Value of Money

The purchasing power of money, which reflects the amount of goods or services that one unit of money can buy.

Dollars

The currency unit used in the United States, representing a standard measure of value.

Consumer Price Index

An index that measures the average change over time in the prices paid by consumers for a market basket of consumer goods and services.