2. The circular-flow model 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. One set of outer arrows shows how dollars flow from Households to Markets for Goods and Services, and then from Markets for Goods and Services to Firms. Then outer arrows show how dollars flow from Firms to Markets for Factors of Production, and then back to Households. The inner set of arrows shows how inputs and outputs flow from Markets for Goods and Services to Households, and then to Markets for Factors of Productions. Then inner arrows show how the inputs and outputs flow from Markets for Factors of Productions to Firms, and then back to Markets for Goods and Services. Based on this model, households earn income when purchase in factor markets. Suppose Kyoko earns $625 per week working as a driving instructor for Passing Left. She uses $8 to take a spin class at Silver's Gym. Silver's Gym pays Jacques $325 per week to work as a trainer. Jacques uses $150 to purchase