CIRCULAR FLOW MULTIPLE CHOICE

Multiple-choice exercise

1 Which of the following is the money flow that corresponds to the real flow
of resources?

consumption

factors of production

goods and services.

incomes

2 On the circular flow diagram of the economy, the arrow from the producer
sector to the overseas sector usually represents

tariffs

producer income

import payments

export receipts

3 Investment in Economics is
when firms buy capital goods.

buying shares.

putting money into a superannuation scheme.

people putting money into an interest bearing deposit.

4 The Circular Flow Diagram is a model showing

how the market system works.

the relationship between major sectors of the economy.

that the different sectors of the economy are interdependent.

the relative importance of the different sectors of the economy.

5 An example of an income payment is wages. These are paid in exchange

for

consumer spending.

human resources.

government spending.

investment.
6 The interdependence of firms with the finance industry is shown by the
statement that firms need the finance industry for

loans and the finance industry need income.

advice on GST.

interest

business advice and loans

7 Which of the following is NOT considered investment in Economics?

a person putting funds into a term deposit.

a business updates its computer.

a farmer who replaces an old fence with a new fence.

a new factory that is built.

8 Which of the following would not be considered part of the income

payments flow in the diagram?

sickness benefits.

royalties.

professional fees.

wages.

9 An example of a Government spending flow would be

building roads.

transfer payments.

subsidies.

wages.
10

Which Flow would d represent?

Export receipts

Balance of Payments.

Imports.

Import payments

11 Venture Finance would be shown by which flow in the above diagram?.

b

12 Which of the following would flow i represent?

import payments

tax payments.

transfer payments.

interest payments.

13 The sale of beef to Russia would best be shown by flow....?

c

d
14 Which sector is number 5?
Firms

Households

Financial

Overseas.

15 Flows f, i, and j all represent

loans

investment

saving

income