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1. The economy's income and expenditure

The following diagram presents a circular-flow model of a simpleeconomy. The outer set of arrows (shown in green) shows the flow ofdollars, and the inner set of arrows (shown in red) shows thecorresponding flow of inputs and outputs.

  

Based on this model, households earn income when  purchase   in markets for factors ofproduction.

Suppose Eleanor earns $625 per week working as a jewelryappraiser for Classy's Jewelry Store. She uses $9 to have breakfastat Dinah's Diner. Dinah's Diner pays Darnell $325 per week to workas a short-order cook. Darnell uses $100 to purchase a necklacefrom Classy's Jewelry Store.

Identify whether each of the following events in this scenariooccurs in the market for factors of production or the market forgoods and services.

Event	Market for Factors of Production	Market for Goods and Services
Eleanor earns $625 per week working for Classy's JewelryStore.
Darnell spends $100 to purchase a necklace from Classy'sJewelry Store.
Darnell earns $325 per week working for Dinah's Diner.

Which of the elements of this scenario represent a flow from afirm to a household? This could be a flow of dollars, inputs, oroutputs. Check all that apply.

The $325 per week Darnell earns working for Dinah's Diner

The $100 Darnell spends to purchase a necklace from Classy'sJewelry Store

The breakfast Eleanor receives

True or False: Gross domestic product (GDP) measures totalexpenditures on final goods and services during a given period oftime.