JacPlus 8.2

List the four main sectors in the Four Sector Circular Flow Diagram

What does the Four Sector Circular Flow Diagram depict?

• Interactions between households, businesses, government, and the foreign sector in an economy.

• It represents the flow of money in a banking system.
• It illustrates the production process of goods and services.
• It shows the relationship between supply and demand in a market.

Match the following

• Government

• Taxes citizens and spends taxes to help the economy and society

• Producers

• Provides financial services

• Consumers

• Supplies Goods and Services

• Banks/Financial Intermediaries

• Works for money

What are the main actions of Consumers in the 4SCFD? Choose all that apply:

• Purchasing needs and wants from businesses

• Providing labour to business to earn money

• Paying taxes to the government

• Depositing savings in Financial institutions

What are the main actions of Producers in the 4SCFD?

• Producing and suppling Goods and Services

• Employing consumers to gain their labour

• Paying wages or salaries to their employees

• Paying taxes on their profits to the Government

Which sector is responsible to collecting and allocating taxes?

• Consumers

• Producers

• Government

• Financial

Which sector has the role of accepting savings and investing them to other consumers or businesses?

• Consumers

• Producers

• Government

• Financial

If the Government taxes you, is this a leakage or an injection into the economy?

• Leakage

• Injection

• Both

• Neither

If a bank (Financial sector) decides to invest your savings in a new mining business, is this a leakage or an injection into the economy?

• Leakage

• Injection

• Both

• Neither

What is a function of financial intermediaries which is also an injection into the economy?

• • They collect taxes from households

• • They provide credit to businesses and households

• • They control government spending

• • They pay wages to households