Chapter 17 Sec 2

Bell Ringer What do you do to get your pizza? What happens with the money you give the pizza shop? Name something the pizza shop owners do with the money they get. What is one thing the suppliers do with that money? What is one thing the repair company does with that money?

Economic Sectors and Circular Flow  Market- The free and willing exchange of goods and services between buyers and sellers. - not necessarily a place - May be local, regional, national or global  Circular flow of Economic Activity- In the market system, the flow of resources, goods and services and money of actually circular - The circular flow has 4 sectors (parts). * Show Circular Flow Model

Circular Flow 4 Sectors  The Consumer Sector- Consumers earn their income in factor markets- the markets where productive resources are bought and sold. - Workers earn wages, salaries, and tips in exchange for labor  The Business Sector- Workers spend their incomes in the product market- markets where producers offer goods and services for sale. - Business uses the payments from sales for purchase of factors of production

 The Government Sector- This sector is made up of all 3 levels of gov’t. The gov’t sector produces goods and services, It purchases productive inputs, or resources, in the factor markets. 2 nd largest sector *Show Gov’t Spending Revenues and Expenditures The gov’t receives revenue from the services it sells. Gov’t uses it revenue to purchase final goods and services.  The Foreign Sector- The U.S. buys and sells products from other countries. Only 4% of the GDP.

Promoting Economic Growth Economic growth occurs when a nation’s total output of goods and Services increase over time. - Circular flow becomes larger and raises standard of living  Productivity- Efficient use of resources. A measure of the amount of output produced by a given level of inputs over a specific period of time (all factors of production. - Automation and robotics - Increases w/investment of human capital.

 Specialization- Takes place people, businesses, regions, or even countries concentrate on goods or services that they can produce better than anyone else. - improves productivity  Division of Labor- breaking down a job into small task performed by different workers - use of differences in skills and abilities *show consumer spending pie graph

Economic Sectors