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Circular Flow Model

Nicole Bernardo

on 10 December 2012

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Transcript of Economics

Households Firms Product Market Circular
Model Factor Market >Goods immediately used for personal purposes.
> Examples: clothes, toys, finished products Consumer Goods > Goods used for production.
> Examples: hammers, nails, tractors, money, etc. Capital Goods Firms Resources Mr. Damon Factor Market Factors of Production are bought and sold in the
Factor Market.

4 Factors of Production:
1. Land
2. Labor
3. Capital
-Consumer Goods
-Capital Goods
4. Entrepreneurial Ability Products Factors of Production Products Factors of Production Now for an unrelated Economics joke... Government Plant= Factory Subsidy to firms Firm= Collection of plants Industry= Collection of firms Transfer Payment Taxes from firms Taxes from households From firms, products are shipped
to various stores where they enter
the Product Market. Product Market > Consumers buy goods from the Product Market.

> Stores such as Best Buy, H-E-B, and Wal-Mart are all part of the Product Market. Production Possibilities Curve Households > The household controls our resources
(Factors of Production.)

> Households buy products from the Product Market and sell Factors of Production to the Factor Market. Law of Demand Government Law of Supply Markets- producers and consumers come together to exchange goods and services.
> The government gives subsidies to firms.
> The government gives transfer payments to households.
> Taxes are collected by the government from both households and firms. The Circular Flow Model shows the movement of resources and products throughout society. The Expenditure Approach GDP= C + Ig + G + Xn C- Personal Consumption
Ig- Gross Private Domestic Investment
G- Government Spending
Xn- Net Exports The Lighter Side.... A presentation by
Sarah and Nicole Bernardo The Aggregate Supply and Demand Curve Economics Dictator Just For Fun...
The Economics of Corporate Greed
> A video from the movie "The Other Guys" The Consumption and Savings Functions The Business Cycle
Full transcript