1. Circular Flow of Economic Activity

2. Draw Diagram Product Market Foreign Sector Gov’t Sector
Consumer Sector
Business Sector
Factor Market

3. Consumer Sector Earn money through the factor market Factor Market—
where the worker earns money in exchange for labor
where resources are bought and sold

4. Business Sector Sells goods and services to consumers Product Market
Where money is spent
Where producers offer goods and services for sale

5. Foreign Sector Only sector to sell in and out of the country
Effects our economic interdependence—extent to which one country depends on other countries

6. Government Sector Also produces goods and services
Example – tools for national defense
Earns money for all services sold
Earns most money from taxes collected