Answer to Question #300930 in Microeconomics for ryan

Question

1.    The Circular Flow Model of the Economy:

a.  What are the four general categories of economic resources that companies need? List each one. 4 Marks

b.  Using TD Bank provide an example of each type of resource. 4 Marks

               Carefully Analyse the Circular Flow Model of the Economy shown above!

c.  Which arrow shows the flow of goods and services? Why? 2 Marks

d.  Which arrow shows the flow of spending by households? Why? 2 Marks

Answer 1

Circular flow model of an economy

a) What are the four general categories of economic resources that companies need

1. Land

2. Labour

3. Capital

4. Entrepreneurship

b) Provide an example of each type of resource for TD bank.

1. Purchased land

2. It's workforce

3. Owners equity

4. Skills and personnel

c) Which arrow shows the flow of goods and services? Why?

Arrow A. This is because firms are the ones that produce goods or provide services for households use.

d). Which arrow shows the flow of spending by households? Why?

Arrow B. This is because households must pay for the goods or services provided