Which best explains why the free-market system follows a circular-flow model? Free choices made by consumers and producers influence each other .
How does a free-market system have a circular flow of influences?
Which best explains how a free-market system has a circular flow of influences? – In order t be efficient, producers recycle resources back to nature. – Consumer decisions affect producers, and producer decisions affect consumers. ... – Wages flow in a circular way back and forth between consumers and producers .
What does the circular flow model show in a free-market?
The circular flow model is an economic model that shows the flow of money through the economy . The most common form of this model shows the circular flow of income between the household sector and the business sector. ... Households purchase goods and services, which businesses provide through the product market.
Which of the following best explains how a free-market system has a circular?
Which best explains how a free-market system has a circular flow of influences? Consumer decisions affect producers, and producer decisions affect consumers.
What is the purpose of the circular flow model of a market economy?
The basic purpose of the circular flow model is to understand how money moves within an economy . It breaks the economy down into two primary players: households and corporations. It separates the markets that these participants operate in as markets for goods and services and the markets for the factors of production.
What are the 3 economic questions?
- What to produce? ➢ What should be produced in a world with limited resources? ...
- How to produce? ➢ What resources should be used? ...
- Who consumes what is produced? ➢ Who acquires the product?
(1) what to produce, (2) how to produce, and (3) for whom to produce . What is produced? based on custom and the habit of how such decisions were made in the past.
What are the three phases of circular flow of income?
1. What Is Circular Flow of Income? It can be described as the flow of products, services, income and expenses in an economy. Typically, there are 3 phases inflow of income – Production phase, income phase and expenditure phase .
Who are the four participants in the circular flow?
The circular flow model illustrates the economic relationships among all players in the economy: households, firms, the factors market, the goods- and-services market, government, and foreign trade .
What are the two flows in the circular flow model?
One of the most useful is the circular flow model. The circular flow model highlights the “flows” within the economy— the flow of economic resources, goods and services, and the flow of money.
A primary goal of socialism is social equality and a distribution of wealth based on one’s contribution to society , and an economic arrangement that would serve the interests of society as a whole.
Which best describes the system in a mixed economy?
A mixed economic system is a system that combines aspects of both capitalism and socialism . A mixed economic system protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims.
Which best explains the profit motive?
The profit motive is the intent to achieve a monetary gain in a project , transaction, or material endeavor. Simply put, the profit motive suggests that people tend to take actions that will result in them making money (profiting).
What are the four main parts of the circular flow diagram?
The four sectors are as follows: household, firm, government, and foreign . The arrows denote the flow of income through the units in the economy.
How does money make the circular flow model more efficient?
How does money make the circular flow model more efficient? Having a common medium of exchange, like money , eliminates the need to barter.
Which are the two markets represented in the simplest circular flow diagram?
What two markets are represented in the circular-flow diagram? The market for goods and services and the market for factors.
