Circular flow of income

What is the circular flow of income

• It is earning an income such as rent, wages and spending it on goods and services.

• It is the flow of resources, goods and services and money between different sectors of the economy.

• It is the flow of money exchange, being income from firms and consumer expenditure from households.

• It is buying factors of production to produce and sell goods and services.

What does 5 and 6 represents

• Factor of production

• Revenues

• Resources

• Goods and services

What represents 3?

• Labour, Land, Capital and Enterprise

• Wages, rent, interest and profits

• Inputs for production

• Income

What is being represented by the "red flow line"

• The flow of money

• Taxes

• Productive resources

• The flow of goods and services

what is a product market?

• where consumers purchase the goods and services we want from businesses

• Where business firms buy the productive resources they need to make their products

What is a resource market?

(a)  

What is B?

(a)  

What is D?

(a)  

What is the role of firms?

• Investments in order to make more money

• Provide public goods and services

• Buy resources for production from households in exchange for those resources

• Earning income and spending it on goods and services

What is the role of households?

(a)