1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Markets for Goods and Services Firms Households Markets for Factors of Production in markets for factors of production. Based on this model, households earn income when purchase Suppose Janet earns $650 per week working as a registered nurse for the Medical Clinic. She uses $9 to have a pint at Breanna's Brewing Company. Breanna's Brewing Company pays Felix $450 per week to serve as head brewer. Felix uses $400 to purchase a sleep test from the Medical Clinic