Describe how the circular-flow diagram works

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1. Describe how the circular-flow diagram works.

2. Name the parts of the diagram that correspond to the flow of goods and services if you were to pay $50 for a new pair of shoes at a local shop.

3. Name the parts of the circular-flow diagram that correspond to the flow of dollars for your $50 pair of shoes.

4. Using the circular-flow diagram, explain how your purchase of the $50 new shoes is helping the business from which you bought them make decisions.

5. Describe how businesses use the production possibilities frontier to make decisions.

Reference no: EM13995828

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