Which of the following best illustrates the circular ﬂow model in action?
A) Bobbie goes to work and builds cars; she uses the income she receives to buy food at the grocery store.
B) Evan buys a new couch; the owner of the furniture store uses some of the money from the sale to pay her supplier and uses the rest to take her family out to dinner.
C) Boeing experiences a surge in orders for new airplanes, prompting the company to hire more workers.
D) All of these answers illustrate the workings of the circular ﬂow model.

Question

Quizplus · Accepted Answer

All of these answers illustrate the workings of the circular ﬂow model as they show the movement of goods, services, and money between households, firms, and markets. In option A, Bobbie sells her labor to the firm, and then uses the income to buy goods from the market. In option B, Evan buys goods from the furniture store, which then uses the money to pay for its inputs and other expenses, while the remaining money is spent on consumption. In option C, Boeing's hiring of new workers creates jobs and income, which in turn supports consumption and investment in the economy.

Which of the Following Best Illustrates the Circular ﬂOw Model