1. The economy's income and expenditure The following diagram presents a circularflow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and th inner set of arrows (shown in red) shows the corresponding ow of inputs and outputs. Marketsfor Factors of Production Based on this model, households earn income when Y purchase V in markets for factors of production. suppose Megan earns $700 per week working as a programmer for PC Pros. She uses $8 to order a mojito cocktail at Little Havana. Little Havana pays Larry $450 per week to wait tables. Larry uses $250 to purchase software from PC Pros. Identify whether each of the following events in this scenario occurs in the market for factors of production or the market for goods and services. Event Market for Factors of Production Market for Goods and Services Megan spends $8 to order a mojito cocktail. O O Megan earns $700 per week working for PC Pros. O O Larry earns $450 per week working for Little Havana. O Q Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all that apply. C] The mojito Megan receives C] Megan's labor [3 The $250 Larry spends to purchase software from PC Pros True or False: Gross domestic product (GDP) measures total expenditures on nal goods and services during a given period of time. 0 True 0 False