Circular Flow & Quantitative Elements is one of 9 topics in the Grade 10 Economics CAPS syllabus, covered across 3 lessons on Study Vault. Below are real practice questions from this topic with full worked answers.
Sample practice questions
Easy
1. In the simple two-sector circular flow model, the two main participants are:
Households and firms
Government and the foreign sector
Banks and households
Firms and government
Answer: Households and firms — The simplest circular flow model (a closed economy with no government) has two participants: households, which supply factors of production and consume goods, and firms, which produce goods and pay for factors of production.
Easy
2. In the factor market, households:
Supply factors of production to firms and receive factor income in return
Buy goods and services from firms
Pay taxes to the government
Sell goods and services to firms
Answer: Supply factors of production to firms and receive factor income in return — In the factor market, households supply land, labour, capital and entrepreneurship to firms, receiving factor income (rent, wages, interest, profit) in return.
Medium
3. What term describes an economy that has no interaction with the rest of the world, with no imports or exports?
Answer: A closed economy — A closed economy is one that does not trade with, or otherwise interact economically with, other countries, unlike an open economy, which does.
