1. The economy's income and expenditure
The following diagram presents a circular-flow model of a simpleeconomy. The outer set of arrows (shown in green) shows the flow ofdollars, and the inner set of arrows (shown in red) shows thecorresponding flow of inputs and outputs.
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Based on this model, households earn income when  purchase   in markets for factors ofproduction.
Suppose Eleanor earns $625 per week working as a jewelryappraiser for Classy's Jewelry Store. She uses $9 to have breakfastat Dinah's Diner. Dinah's Diner pays Darnell $325 per week to workas a short-order cook. Darnell uses $100 to purchase a necklacefrom Classy's Jewelry Store.
Identify whether each of the following events in this scenariooccurs in the market for factors of production or the market forgoods and services.
Event | Market for Factors of Production | Market for Goods and Services |
|---|
| Eleanor earns $625 per week working for Classy's JewelryStore. | | | |
| Darnell spends $100 to purchase a necklace from Classy'sJewelry Store. | | | |
| Darnell earns $325 per week working for Dinah's Diner. | | | |
Which of the elements of this scenario represent a flow from afirm to a household? This could be a flow of dollars, inputs, oroutputs. Check all that apply.
The $325 per week Darnell earns working for Dinah's Diner
The $100 Darnell spends to purchase a necklace from Classy'sJewelry Store
The breakfast Eleanor receives
True or False: Gross domestic product (GDP) measures totalexpenditures on final goods and services during a given period oftime.
