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Circular Flow: True or False

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Circular Flow: True or False

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Test your understanding of the circular flow of income.

Created by

Montex
Montex
Canada

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Circular Flow: True or False
 

Circular Flow: True or FalseOnline version

Test your understanding of the circular flow of income.

by Montex
1

The simple circular flow model focuses on the interaction between households and firms.

2

Households supply factors of production to firms.

3

In the circular flow, firms pay households for goods and services directly.

4

The government does not participate in the circular flow in the simple model.

5

Leakages from the circular flow include savings, taxes, and imports.

6

Exports are a leakage that reduces the overall size of the circular flow.

7

There is no real flow of factors of production in the circular flow diagram.

8

Money flows only from firms to households and never back to firms.

9

The circular flow of income shows money moving between households, firms, the government, and the foreign sector.

10

Injections into the circular flow include investment, government expenditure, and exports.

 
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