Sunday, February 8, 2015


Circular flow model: represents transactions in a economy. All goods and services flow in a clockwise direction.
  
Product Market: this is the place where goods and services are produced by businesses and are bought and sold to households.     
  • Firms sell, households buy 
Resource or factor market: the place where households sell resources and businesses by resources. 
  • firms buy, households sell  
Households: person or a group of people that share their income        
  • sell resources, buy products  
Firms: is an organization that produces goods and services for sale                                              
  •  buy resources, sell products 
 
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1 comment:

  1. Celina G.February 10, 2015 at 5:53 AM

    you might want to add that for things not included in GDP gifts and transfer payments have
    Public transfer payments:
    Recipients contribute nothing to the current production
    Welfare payments or social security
    Taxes paid by individuals are given to the public
    and
    Private transfer payments produce no output
    Simply transfer funds from one private individual to another
    Ex: Scholarship

    ReplyDelete

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