Exam 1 2

Exam 1 2 - Every transaction that is made in this economy...

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Every transaction that is made in this economy goes through a repetitive flow of goods and services, resources, and money. This continuous flow is known as the circular flow model in modern economics. In this model resources flow from businesses to households through the resource market. Products in this model flow from businesses to households through the product market. I will show how the circular flow model works by explaining how the recent T.V. that I bought flows through the model. I recently purchased a T.V. from our family business. I bought this T.V. from the business through the product market to produce revenue for the business. In order to make any kind of purchase, one needs a form of income. I made money to make this purchase by working at our family business. By working at this business I am providing a labor resource to this business. The business provides me with income for the labor that I provide through the resource market. In order for this business to provide me with
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Exam 1 2 - Every transaction that is made in this economy...

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