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6.01 Circular Flow Diagram

Water Pollution

By: Madelyn Babson

Government

The Government can borrow money from the financial market to pay for new cleaner water systems and workers to regulate it. They can create more jobs and programs to raise awareness to water pollution.

The government buys supplies and products needed to run and filter the water.

The government makes sure the water is okay and won't cause any illnesses by enforcing regulations.

Individuals pay taxes to help out the programs that help regulate clean water.

Buying bottled water from the market.

Households can invest in the financial market and buy stocks in clean water companies.

Household

Citizens and employees work at water companies or factories to keep water clean and insure its safety. They increase the awareness and bring home an income.

Product

Market

The factor market produces machinery to allow business firms to produce clean water.

Households buy water that is safe to drink from the product market.

Factor

Financial

Market

Market

Business firms gain revenue from producing clean, safe water that households can buy.

Business firms spend money on supplying the factory with the goods and workers it needs to produce machinery to clean water.

Business Firms

Water companies help put clean water back into the product market that can then be sold back to consumers.

Business firms borrow money from the financial market to help their company grow by paying for more workers, goods and machinery to help obtain clean water.

The financial market allows foreign businesses and investors to buy stocks and borrow money to help produce cheaper goods.

Product markets can export safer, cleaner and healthier water to the rest of the world.

Rest of the World

With foreign imports, they can supply the product market with cheaper cleaner plastic bottles or other goods to help the company produce safer and cleaner water.

Foreign investors allow the financial market to borrow money and they purchase stocks in the water companies to help them grow. This helps the water companies expand and make more cleaner water available.

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