1. The Circular Flow Model with Government is another important model for students to understand. a. Please explain what the model shows us. b. List and explain the assumptions of the model. i. There are 3 assumptions of the Circular Flow Model with Government. You should be able to list and explain each. c. List and explain the characteristics of each component – be thorough. i. Government sector – list and explain the characteristics ii. Household sector – list and explain the characteristics iii. Business sector – list and explain the characteristics iv. Product market – list and explain the characteristics v. Resource market – list and explain the characteristics d. Thoroughly explain how each component of the model interacts with the other components – be thorough. i. Explain how all of the sectors and markets interact with each other. You can do this as part of your answer to part ( c) if you like.
2. Demand, Supply, Market Equilibrium a. Please Thoroughly and completely explain the Law of Demand i. Define demand and state the law of demand. ii. List and explain the 3 factors that support the law of demand. 1. List and explain each of the 3 factors discussed in the slides. iii. List and explain the determinants of demand and how each can either cause an increase in demand or a decrease in demand. 1. List and explain each of the 5 determinants and how they impact demand. iv. Thoroughly and completely explain the differences between a change in demand and a change in quantity demanded. 1. You should be able to explain each of these cases and draw a picture of each case.