The Circular Flow Model
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Objective
I can draw and explain the circular flow model, including the roles of households, businesses, and government.
Part 1 of 4
Warm-up video
Federal Reserve Bank of St. Louis · 8:29Vetted channel
We don't generate video — this one is by Federal Reserve Bank of St. Louis on YouTube. The practice questions and exit ticket below were drafted by AI for this objective, and every question is editable in the teacher guide.
Part 2 of 4
Key concepts
3 concepts
- 1
The circular flow model illustrates the flows of factors of production, goods and services, and money within the economy.
- 2
Households own all the factors of production in the economy, which include land, labor, capital, and entrepreneurial ability.
- 3
In the market for resources, households sell resources and businesses buy resources, while in the market for goods and services, businesses sell goods and services and households buy them.
Part 3 of 4
Practice
8 questions
In the circular flow model, what role do households play in the market for resources?
Describe the flow of money and resources between households and businesses in the market for goods and services.
Part 4 of 4
Exit ticket
Quick comprehension check
“Draw the circular flow model. Label the two decision-makers and the two markets. Indicate the direction of resource flow and money flow.”
Sample answer included in the free materials
Get the materials
Teacher guide, student handout, and slides — free, in Google Docs format
Teacher Guide
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