Home › Tamil Nadu HSC (Class 12) › Economics › Introduction to Macro Economics › The three-sector circular flow model represents …
The three-sector circular flow model represents which kind of economy?
AA simple economy of households and firms only
BAn open economy trading with the rest of world
CA mixed and closed economy including government
DA purely socialist economy under central planning
Answer & Solution
Correct answer: C. A mixed and closed economy including government
1. The textbook maps each circular flow model onto a type of economy.
2. The two-sector model is for a simple economy with households and firms.
3. The three-sector model is for a mixed and closed economy, with households, firms and government.
4. The four-sector model is for an open economy, which adds the rest of the world.
5. The word closed is the part students drop, since the government sector alone does not open the economy to trade.
_Source: TN HSC Class 12 Economics (Samacheer Kalvi, Govt of Tamil Nadu), Ch 1 "Introduction to Macro Economics", §1.9_
Related questions
In the circular flow diagram, what do the outer and inner circles respectively represent?Globalism, the ideology connecting nations through international trade, is also termed:A socialist economy is also known by which other names?The limitation of macro economics captured by the phrase 'what is good for an individual nIn a capitalist economy, which mechanism does the textbook describe as the heart of the syWhich circular flow model represents an open economy, and what is its income identity?The two sectors in a two-sector circular flow model are:Which of the following is a flow variable rather than a stock variable?