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Circular Flow Matrix
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Transcript
The Circular Flow
MATRIX
-----Allows for----- households to sell -their resources to- ----businesses----
--In return, they will-- --receive income for-- -their contribution as- -one or more of the 4- --factors of income-- (rent, wages, income, and profit) depending ---on the resource--- -------provided.-------
-Businesses have to- -pay for resources, so- they use some of their -revenue to get them.-
Resource Market
Cost of Production
Income
They pay for resources --such as firefighters,- construction workers, ----and teachers.----
---Households will--- provide one or more of ----the 4 factors of---- ---resources (land,--- --labor, capital, and-- -entrepreneurship) to- ------the market.------
The government pays--for these resources- --in a process called--government spending.
-Businesses will use- --these resources to-- -manufacture goods-
Government Spending
Resources
Resources
Resources
While the government --taxes businesses,-- --they provide them-- ---public goods and--- transfer payments (in their case, subsidies).
While the government --taxes households,-- --they provide them-- ---public goods and--- transfer payments (in -their case, welfare).-
Taxes
Taxes
The government runs the public --sector part of the economy,-- --which makes schools, roads,-- ------national defense, etc------
-Provides goods &----resources to--- ----households----
Provides resources -----(workers,----- machinery, etc.) to ----businesses----
Welfare
Subsidies
Government
Businesses
Households
Goods
Goods
Households go to the --product market to-----receive certain--- items they may need -------or want-------
-Businesses give the- ---product market--- merchandise to sell to -----households-----
The government pays --for these goods in-- ---a process called--- government spending.
---The government--- -purchases goods &- services from product -------markets.-------
Goods & Services
Goods & Services
Goods & Services
Government Spending
---They spend their--- ----money on the---- manufactured items, basically "consuming" ---------them.---------
The money accrued is ------given to the------ ----businesses as---- -------revenue-------
-----Allows for----- businesses to sell -their products to- ----households----
Product Market
Revenue $$$
Consumer Spending