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Producing Ohio: Creating Our Economy
Economics in Action

Circular Flow
The Circular Flow Model is a "picture" of a market economy in action. The Factors of Production (land, labor, capital and entrepreneurship) flow from households (consumers like you and me) to producers (businesses). Goods and services flow from producers to consumers and, in exchange, money flows in the opposite direction.

Sometimes the economy flows slowly, which means there's a decrease in economic activity. Other times it flows more quickly, reflecting an increase. This is because there are lots of events and actions that can affect the flow. For example, more production and consumption will make the flow increase.

Below you'll find ten examples of events or factors that can affect the level of economic activity. For each example, predict whether the event will cause the economy to increase production and consumption of goods and services - making the model move faster - or if the event will cause the economy to decrease - which means the model slows down.

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