1. OPENING Describe what you believe microeconomics will cover in 2 sentences.

2. SSEMI1 The student will describe how households, businesses, and governments are interdependent and interact through flows of goods, services, and money. a. Illustrate by means of a circular flow diagram, the Product market; the Resource (factor) market; the real flow of goods and services between and among businesses, households, and government; and the flow of money. b. Explain the role of money as a medium of exchange and how it facilitates exchange. MONEY AND THE CIRCULAR FLOW MODEL

3. MICROECONOMICS Small scale Covers the interactions of businesses (firms) and households (individuals), with small roles of the government Includes studying markets – any place where buyers and sellers make exchanges The study of markets are at local and sometimes state levels

4. Medium of Exchange Makes it easier to have transactions Store of Value Must hold value over time Unit of Account Provide a common measure of the value of goods and services MONEY’S 3 FUNCTIONS

5. CIRCULAR FLOW MODEL Shows the interaction between households, businesses, and government in the free market. Household – Person or group of people living in the same residence Firm – an organization that uses resources to make a product, which it sells. Resource (Factor) Market – Where firms purchase from households (labor, land, borrowing capital) Product Market – Where households purchase from firms (goods, services) Monetary flows – shows the flow of money Physical flows – shows the flow of goods and services