Using the language of and components of the circular flow diagram,Answer the following questions:1)Which institution or group of institutions of the circular flow model is missing? Explain how you might include those groups into this model.2)In what way our business and households both sellers and buyers in this model?3)What are the flows in this circular flow model?4) Labor, land, capital,kevgraph73 of 917FIGURE 2.2 The circular flowdiagram. Resources flow from households to businessesthrough the resource market, and products flow frombusinesses to households through the product market.Opposite these real flows are monetary flows. Householdsreceive income from businesses (their costs) through theresource market, and businesses receive revenue fromMoney incomeRESOURCEMARKET• Households sell• Businesses buyhouseholds (their expenditures) through the productmarket.HOUSEHOLDSBUSINESSES• buy resources• sell products• sell resources• buy productsservicesPRODUCTMARKETCoods and se• Businesses sell• Households buyConsumption(wages,nterest, profits)rents.ral, entrepreneurial abilityCostsResourcesservicesexpendituresGoods andRevenue

Answered: 1)Which institution or group of…

1)Which institution or group of institutions of the circular flow model is missing? Explain how you might include those groups into this model.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter2: Thinking Like An Economist

Section: Chapter Questions

Problem 1PA

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Question

Using the language of and components of the circular flow diagram,

Answer the following questions:

1)Which institution or group of institutions of the circular flow model is missing? Explain how you might include those groups into this model.

2)In what way our business and households both sellers and buyers in this model?

3)What are the flows in this circular flow model?

Labor, land, capital,
kevgraph
73 of 917
FIGURE 2.2 The circular flow
diagram. Resources flow from households to businesses
through the resource market, and products flow from
businesses to households through the product market.
Opposite these real flows are monetary flows. Households
receive income from businesses (their costs) through the
resource market, and businesses receive revenue from
Money income
RESOURCE
MARKET
• Households sell
• Businesses buy
households (their expenditures) through the product
market.
HOUSEHOLDS
BUSINESSES
• buy resources
• sell products
• sell resources
• buy products
services
PRODUCT
MARKET
Coods and se
• Businesses sell
• Households buy
Consumption
(wages,
nterest, profits)
rents.
ral, entrepre
neurial ability
Costs
Resources
services
expenditures
Goods and
Revenue

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