The circular flow model is a crucial component of economics that shows how firms and households depend on each other to keep theeconomy healthy.
1. Describe the type of exchanges that are made between firms and households in the
product market. Then, to illustrate your description, provide a specific example of an
exchange that might occur between a firm and a household in the product market. (1
point for the description, 1 point for the example)
2. Describe the type of exchanges that are made between firms and households in the
factor market. Then, to illustrate your description, provide a specific example of an
exchange that might occur between a firm and a household in the factor market (1 point
for the description, 1 point for the example)