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.

Based on this model, households earn income when purchase in markets for factors of production.

Suppose Ana earns $600 per week working as a flight attendant for Flyaway Airlines. She uses $8 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Yakov $300 per week to work the cash register. Yakov uses $200 to purchase air travel to Hawaii from Flyaway Airlines.

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
Yakov earns $300 per week working for Pillmart Pharmacy.
Yakov spends $200 to purchase air travel to Hawaii from Flyaway Airlines.
Ana earns $600 per week working for Flyaway Airlines.

Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs.Check all that apply.

The $300 per week Yakov earns working for Pillmart Pharmacy

The aspirin Ana receives

The $200 Yakov spends to purchase air travel to Hawaii from Flyaway Airlines

True or False: Gross domestic product (GDP) cannot be used to measure the economy's income.

True

False