The inhabitants of the fictional economy of Atlantis use money in the form of cowry shells. Draw a circular-flow diagram showing households and firms. Firms produce potatoes and fish, and households buy potatoes and fish. Households also provide the land and labor to firms. Identify where in the flows of cowry shells or physical things (goods and services, or resources) each of the following impacts would occur.
Describe how this impact spreads around the circle.
a. A devastating hurricane floods many of the potato fields.
b. A very productive fishing season yields a very large number of fish caught.
c. The inhabitants of Atlantis discover Shakira and spend several days a month at dancing festivals.