Circular Flow of Funds Test
Use the following to Answer Questions 1 - 13. You may use more than one twice –
or not use any at all.
A. Product Market
B. Factor (Resource) Market
C. Revenue
D. Business Expenditures
E. Consumer Income
F. Factors of Production
G. Finished Goods
H. Households
I. Businesses
J. Households Expenditures
K. Government
L. Government Revenue
M. Government Expenditures
1) This is who has skills and abilities available and go searching to give these skills
in return for income.
2) This is who is in search of profit and pays out $ for factors of products to produce
goods.
3) This is who regulates the mixed economy.
4) This is what is made by businesses and taken to the product market.
5) This is what households are in search of when they take their money and go
spend it at the product market.
6) Another words for taxes paid to the government.
7) What the government pays to HH and Business in return for Factors of
Production and finished goods.
8) If people have money to invest in a corporation, this is the market it takes place
in.
9) What do HH get in return at the resource market for their Factors of
Production?
10) What HH take to the product market
11) This is what Households posses at the Factor Market
12) Land, Labor, Capital, Entrepreneurship
13) This is the money paid for skills, abilities, and labor (FoP).
David's mother sends him to the grocery store to buy milk. While at the store, David
decides he is hungry and buys a dozen doughnuts for a snack. At the cash register,
David finds that after paying for the doughnuts, he doesn't have enough money to pay
for the milk. David's mother is not happy. She decides that he needs to get a job in
order to become more responsible. David's best friend tells him that Handy Man's Car
Wash is hiring. He applies and is hired to become a car dryer. David is very excited
about his new job and the money he will soon be earning.
14) When David gets a job at the car wash, what is he doing?
A. selling his resources
B. selling his goods
C. buying his resources
D. buying his goods
15) The Grocery Store is what sector of the Circular Flow Model
A. Households
B. Business Firms
C. Factor
D. Production
Mary applies for an after-school job at a department store which is the supplier of
labor in the _______ market. Her salary will be a ________ to the business and a(n)
________ to her household. Mary decides to spend some of her salary on a dress at
the mall. Her purchase of goods in the ________ market is a revenue to a business
and ________ spending for a household.
16) Which of the following best completes the scenario above?
A.
B.
C.
D.
income ... product ... consumption ... cost ... factor
product ... consumption ... factor ... income ... cost
factor ... cost ... income ... product ... consumption
consumption ... factor ... product ... cost ... income
17) Alan has receives a degree and has applied to teach at Bridgeport about texting
and pot. Where in the circular flow is this?
A. Product
B. Government
C. Business
D. Household
18) The United States Airforce awards a contract to Lockeed Martin to build them
some big airplanes. Where in the circular flow is this?
A. Product
B. Government
C. Business
D. Household
19) A capitalistic society with no state or government control is known as a
A. Modified Enterprise System
B. Mixed Economy
C. Free Enterprise system
D. Mixed Modified Economic System
20) The United States has a
A. Modified Enterprise System
B. Mixed Economy
C. Free Enterprise system
D. Mixed Modified Economic System