THE CIRCULAR FLOW MODEL Complicating the Model - PowerPoint Presentation

Slide1

THE CIRCULAR FLOW MODELSlide2
Slide3
Slide4

Complicating the ModelSlide5
Slide6
Slide7
Slide8
Slide9
Slide10

1.

Goods and services flow from

a. firms to households via the factor

market

b.

firms to households via the product market

c

. households to firms via the government

d. households to firms via the factor

market

e. households to firms via the product

marketSlide11

2.

The factors of production flow from

a. firms to households via the product

market

b.

firms to households via the factor market

c. households to firms via the government

d.

households to firms via the product market

e.

households to firms via the factor market Slide12

3.

The money paid to households via the factor market is called

a.

income

b. profit

c.

wages

d. taxes

e. revenueSlide13

4

.

The money paid to firms via the product market is called

a. wages

b.

income

c.

profit

d.

revenue

e.

taxes Slide14

5

.

The money paid by households and firms to the government is called

a. profit

b.

income

c. revenue

d. wages

e.

taxes Slide15

6. When Americans buy foreign goods (import), money flows out of the circular flow. This is called a/an

a. injection

b. leakage

c. consumption

d. tax

e. inflation

Slide16

7

. When foreigners buy American exported goods, money flows into the circular flow. This is called a/an

a. injection

b. leakage

c. consumption

d. tax

e. inflation

. Slide17

8. Which of the following are LEAKAGES in the circular flow of goods/services/$ in the product market and the flow resources/$ in the factor market between households and firms(leakages in GDP)?

a. taxes

b. transfer payments (like social security)

c. imports

d. exports

e. savings

Slide18

8. All of the following are INJECTIONS into circular flow of goods/services/$ in the product market and the flow resources/$ in the factor market between households and firms (injections in GDP) EXCEPT

a. subsidies

b. transfer payments (like social security)

c. exports

d. investments

e. savings

Slide19

End of QuizSlide20

VIDEO TUTORIAL: GDP (3:50)

EPISODE

20: GDP

 (3:50)Slide21

Gross Domestic Product (GDP)

The value of all final goods and services

Produced within an economy domestically

In a single year

Measured by

Expenditure approach

C + I + G + X

Income approachSlide22
Slide23

Video Tutorials: Real GDP and ECONOMIC GROWTH

EPISODE 21: Real GDP

(2:36)

EPISODE 22: Growth

 (1:30)

Don’t worry. You won’t have to work problems with the formulas on the test.Slide24

What’s NOT counted in GDP?

Used goods

Intermediate goods

Illicit sales (BLACK MARKET)

Personal goods and services

Transfer of assets

Transfer paymentsSlide25

Counting GDP:

EXPENDITURE METHOD:Slide26
Slide27
Slide28
Slide29

1.

The value of all final goods and services produced

within an

economy in a

year:

a.

GNP

b.

GDP

c.

CPI

d. the business cycle

e. the circular flow modelSlide30

2

.

Which

of the following is NOT a component of GDP in the expenditure approach?

a.

consumption

b.

investment

c.

government purchases

d.

net exports

e.

disposable incomeSlide31

3.

Which category makes up the largest share of the United States’ GDP?

a.

consumption

b.

investment

c.

government purchases

d.

net exports

e.

net imports Slide32

4. Which of the following is adjusted for inflation (changes in prices from year to year)?

a.

consumption

b.

net exports

c.

GNP

d.

nominal GDP

e.

real GDPSlide33

5

. Economic growth is measured by

a.

an decrease in nominal GDP.

b. an decrease in real GDP.

c. an increase in nominal GDP.

d. an increase in real GDP.

e. none of these. It’s measured with GNP.Slide34

6. We don’t count the value of intermediate goods in GDP because

a

.

their sale is not legal

b. they are not actually bought or sold

c. they simply represent a transfer of money

d

. they would be double counted when we count the value of final goods

e. all of theseSlide35

7

.

Which of the following is not counted in GDP?

a. the purchase of a

haircut

b. the government's purchase of

flak jackets

c.

the construction of a power plant

d. the purchase of an

I-phon

e

e.

the purchase of ten shares of Microsoft stockSlide36

8. Money

is simply

moved around

and is not used to pay for goods

and services (stock transactions, welfare

payments, Social

Security payments):

a. Personal goods and intermediate goods

b. Illicit sales

c. Black market

d. Transfer payments and financial transfers

e. None of theseSlide37

9

.

Which category of GDP is the government's payment of a Social Security check counted in?

a. net exports

b. government expenditures

c. investment

d

. consumption

e.

The government's payment of a Social Security check is NOT counted in GDP. Slide38

10.

Which of the following statements is NOT correct?

a.

General Motors’ purchase of machinery is counted in investment.

b. Joe's purchase of

a hot car stereo

is not

counted

in

GDP

.

c.

Gerta

the

German's

purchase

of an American made movie

is counted in net exports.

d. The Defense Department's purchase of a

flak jacket is

counted in

government purchases

.

e.

Levi’s purchase of denim material is counted in consumption.Slide39

11. Which category of GDP is the purchase of a new home counted in?

a. net exports

b. government expenditures

c. investment

d. consumption

e. The purchase of a new home is NOT counted in GDP. Slide40
Slide41

The Business Cycle (1:07)

EPISODE 23: Business Cycles

 (1:07)Slide42
Slide43
Slide44

RECESSION

2 consecutive quarters (6 mo.) of negative growth in real GDP

DEPRESSION

8 consecutive quarters (2 yrs.) of negative growth in GDPSlide45

Online Video Series

ECONOMICS USA

- 30 minute programs which give explain economic concepts, giving historical background and context.

Stream free.

See Program

#3:

Economic Growth

See Program #4:

Booms and Busts

for the Business Cycle.