Economic Activity Chapter 19, Section 2

I. Circular Flow of Economic Activity  Market – any economic situation in which there is a willing exchange of goods and services between buyers and sellers.

I. Circular Flow of Economic Activity  Consumer sector – consumers earn their income in factor markets (where productive resources are bought & sold).  Examples are wages, rent, or interest on money saved.

I. Circular Flow of Economic Activity  Business sector – consumers spend their money in the product market (where producers offer goods & services for sale).

I. Circular Flow of Economic Activity  Government sector – also buys (and sells) goods and services, collects taxes and spends the money on goods and services for the people.

I. Circular Flow of Economic Activity  Foreign sector – we buy and sell goods and services from or with other countries.

II. Promoting Economic Growth  Productivity – measure of the amount of output produced with a specific amount of input in a given period of time.  Making more with less = more productivity.