Warmup/Journal #7 Pick up, read, and summarize the article titled “China’s Economy is on Track to Surpass the U.S. by 2035 Also answer if you think this is an accurate article and explain why or why not. ½ page minimum

Economics Unit 2: Competitive Markets Lesson 8: Circular Flow

Circular Flow Model A tool for understanding how the U.S. economy or any market based economy operates.

Economic Actors 2 Economic Actors Consumers = Households Producers = Business Firms 2 Markets Product markets – goods and services Resource markets – land, labor, capital, entrepreneurship

Economic Actors continued These markets do not have a single location and they reflect the supply and demand for any resource Financial markets establish interest rates Labor markets establish the wages required to hire workers

Key Points of Circular Flow Households are both buyers & sellers – buy goods & services in product market – also sell resources – land, labor, capital in the resource market Business firms are both buyers & sellers – in product market sell what they produce – in resource market buys the resources of individuals

Key Points of Circular Flow $$$ also flows in one direction Resources & products always flow in the opposite direction Every action in circular flow has a reaction – every dollar spent in the product market becomes a dollar of income to someone Ex. Can of corn Infinite number of transactions using circular flow model

Read pg. 62 in Book Answer in your notes how each of the three economic questions are answered using the circular flow model

Cooperative Group Work Page 63 – Applying Economic Skills Minicase: The Boeing Company Layoffs One answer sheet per table Due at end of the hour