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Circular Flow Diagram

06.01 Economic Relationships

Stephanie Vazquez

on 11 November 2013

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Transcript of Circular Flow Diagram

Rest of World
Business Firms

Financial Market
Product Market
What does the government buy from the product market? And vice versa…
The government represents any lawmaking body that collects taxes and provides services to individuals and businesses.
The Government spends on materials for the buses which is mostly steel.
Product market is the buying and selling of finished goods.
What do households get/give to/from the government?
The government gives us services and
we give back through taxes
What goods /services are being produced?

More buses
What is being imported and exported?
buses Exported to international consumers .
How will the rest of the world react in the financial markets to your crisis?
more borrowing for the budget to not cut buses

What do businesses need from the financial markets?
Borrowing and stock transactions
Why would the government need to borrow from the financial markets?
Financial market refers to the stock market and banking services, including the loans all the other economic players use to meet their goals.
So the government would borrow from them for loans to make/buy/ support products or for other economic goals.
What do Households give and get from the Financial Markets?
Private savings
What goods/services are going to the households?

transportation for more student
What factors of production are being sent to the business firms? What does this cost the businesses?

Jobs and entrepreneurship goes to the business firms for the purchasing equipment to process buses
Business give back the business cost.
Full transcript