EconH200L2 - Two Examples of Economic Models The Circular...

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Two Examples of Economic Models The Circular Flow Diagram: A simple model of who participates on what markets. Examples of Inputs or Factors of Production are labor, land, capital, energy, and materials. The model assumes that firms do not buy goods or services, there is no government, no asset markets, ... The inner loop is the flow of goods and services. The outer loop is the flow of dollars.
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