Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 2 - Thinking Like an Economist - Questions For Review - Page 35: 5

Answer

Examples of economic interactions that are not covered by the circular flow diagram include the role of governments and international trade.

Work Step by Step

For example, if you buy a coffee from Starbucks, a portion of that dollar might be used to pay taxes or to buy coffee beans from a farmer in Brazil, but the circular flow diagram does not incorporate this.
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