This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: The circular flow model indicates that income flows from households to firms through product markets ... (Read 86 times)

Wadzanai

  • Hero Member
  • *****
  • Posts: 528
on: Jun 30, 2018
The circular flow model indicates that income flows from households to firms through product markets and back from firms to households through factor markets. Is the total amount spent by all households equal to the total income that flows back to all households? Why or why not? Is the amount spent by each individual household equal to the amount that flows back to that specific household? Why or why not?

Question 2

Which of the following is the most unstable category of GDP?
 a. consumption
 b. investment
 c. government purchases
  d. net exports


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

ergserg

  • Sr. Member
  • ****
  • Posts: 338
Reply #1 on: Jun 30, 2018
Answer to Question 1

In our circular flow model, the total amount of spending for all households will be equal to the total amount of income. (The impact of issues such as taxes, exports, and imports could be added later.) However, the total amount spent by any one household is not necessarily equal to the amount of income which that specific household receives. Household income is determined by the value of the factors of production that the household owns rather than the amount of consumption by the household.

Answer to Question 2

b


Wadzanai

  • Member
  • Posts: 528
Reply 2 on: Jun 30, 2018
Gracias!

Jossy

  • Member
  • Posts: 336
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

Hippocrates noted that blood separates into four differently colored liquids when removed from the body and examined: a pure red liquid mixed with white liquid material with a yellow-colored froth at the top and a black substance that settles underneath; he named these the four humors (for blood, phlegm, yellow bile, and black bile).

Did you know?

Medication errors are more common among seriously ill patients than with those with minor conditions.

Did you know?

Side effects from substance abuse include nausea, dehydration, reduced productivitiy, and dependence. Though these effects usually worsen over time, the constant need for the substance often overcomes rational thinking.

Did you know?

Although puberty usually occurs in the early teenage years, the world's youngest parents were two Chinese children who had their first baby when they were 8 and 9 years of age.

Did you know?

Though methadone is often used to treat dependency on other opioids, the drug itself can be abused. Crushing or snorting methadone can achieve the opiate "rush" desired by addicts. Improper use such as these can lead to a dangerous dependency on methadone. This drug now accounts for nearly one-third of opioid-related deaths.

Blood Flow Through The Cardiac Valves Blood Flow Through The Cardiac Valves
Air flows through the PCV valve during idle, cruising, and light-load conditions. Air flows through the PCV valve during idle, cruising, and light-load conditions.
The seven components of the Wernicke-Geschwind model. The seven components of the Wernicke-Geschwind model.
Closed and Open Food Product Dating Closed and Open Food Product Dating
The flow of energy and the cycling of materials maintain nature’s organization The flow of energy and the cycling of materials maintain nature’s organization
Video: Red alga life cycle Animation

For a complete list of videos, visit our video library