1. DO NOW 1. Anticipation Guide—Answer “Before”
2. Warm-up Questions— (answer on BACK)
-Name 2 goods or services you have bought or consumed this week.
-Name 2 things “the government” has provided for you this week.
-What do you think “private sector” means?
-What do you think “public sector” means?

2. The Circular Flow of the U.S. Market Economy

3. Essential Question Learning target
How do individual households, businesses, and government interact in the U.S. (market) economy?
Learning target
I can identify each sector of the US economy found in the circular flow model and explain the flow of resources throughout by illustrating the interaction between each.
I will show this by completing a circular flow model, first with my class and then independently.

4. True
The three parts of the circular flow of economics are: individual households, businesses, and government.
False

5. Only individuals are consumers in an economy.
True
Only individuals are consumers in an economy.
False

6. True
The government is a producer of goods and services in a mixed-market economy.
False

7. True
Only individual households pay taxes to the government in a mixed-market economy.
False

8. True
The government supplies itself with all the resources it needs in a mixed-market economy.
False

9. True
Labor is a human resource that is produced by individual households and used (consumed) by businesses.
False

10. True
In a mixed-market economy, only businesses provide individual households with goods and services.
False

11. True
Individual households, businesses, and the government are all producers in a mixed-market economy.
False

12. The Circular Flow of the U.S. Market Economy
EC 2.1 Describe the interaction of individual households, businesses, and government in the U.S. economy.

13. … flow continuously among
Resources…
Goods and Services…
and Money…
… flow continuously among
Households Businesses Government

14. CIRCULAR FLOW MODEL … This continuous flow of resources,
goods & services, and money
throughout the economy is called the
CIRCULAR FLOW MODEL

15. The CIRCULAR FLOW MODEL has 3 components: INDIVIDUAL HOUSEHOLDS
BUSINESSES (the “private sector”)
GOVERNEMENTS (the “public sector”)

16. Individual Households
own the resources used in production of goods & services:
Human resources– Individuals “own” their time, skills, talents, intellect, etc.
Capital resources- Individuals invest money in banks, stocks, bonds, etc.
sell/invest those resources:
Human resources— “sell” their labor
Capital resources– “invest” their capital
and use the income to purchase private goods & services.

17. Individual Households
Examples of Human resources that households provide:
Businesses– (income paid out of business’ profits…)
Insurance agent
Salesperson
Security guard
Governments– (income paid out of taxes…)
Teacher
Policeman
National Park ranger

18. Businesses Privately-owned producers who…
buy resources used in their production:
Human resources– Pay individuals an income for their
time, skills, talents, intellect, etc.
Capital resources- Use the money individuals invest
to grow
Natural resources- Use capital to purchase inputs
from other businesses
sell the private goods & services to individual households, other businesses, governments
use the profits to buy more resources.

19. Businesses Examples of PRIVATE goods & services
Consumed by individual households:
Cell phone service
Wendy’s french fries
Honda Civic
Consumed other businesses:
Starbuck’s coffee service for a conference
Lumber to a construction company
Temp agency service
Consumed by governments:
Military aircraft production (Boeing, McDonnell Douglas)
School textbooks (Holt, McGraw Hill)

20. Governments At ALL levels—local, state, and national, governments…
receive tax revenue (“income” from taxpayers)
Individual households—paying taxes on income and purchases of private goods & services
Businesses—paying taxes on business income and purchase of private goods & services (resources) to
use the tax revenue to provide public goods and services.

21. Governments Examples of PUBLIC goods & services
Consumed by individual households:
First responders (police, fire, EMS)
Parks
Schools
National security (military, DHS, TSA, Border Patrol, etc)
Consumed other businesses:
Health inspectors
Professional/business licensing

22. In the CIRCULAR FLOW MODEL each part interacts with the others.
There is a “give and take” of resources throughout the model.
If something is going TO a part of the economy, something has to be coming FROM that part in “exchange.”

23. Businesses pay those households income
IN EXCHANGE…
Businesses pay those households income
for their human resources (labor)
Some individual households supply businesses with
human resources (labor)
All households consume…
so, they provide businesses with payments for PRIVATE goods & services
Businesses give households the PRIVATE goods & services they paid for.

24. so, they provide them with tax payments
IN EXCHANGE…
Government pay those households income for their human resources (labor)
Some individual households supply governments with
human resources (labor)
All households live under a government…
so, they provide them with tax payments
Governments provide households with PUBLIC goods & services for their tax payments

25. All businesses operate under a government…so they provide them with
IN EXCHANGE…
Businesses give governments the PRIVATE goods & services they paid for.
Governments consume, too…so, they provide businesses with payments for PRIVATE goods & services
All businesses operate under a government…so they provide them with
tax payments
Governments provide businesses with PUBLIC goods & services for their tax payments

26. Click the arrow to return to the anticipation guide.

27. Taco Bell Sanitation worker Cashier Taco Bell $7.80/HR $10.80/HR
$5.00
10% tax
A Gordito Combo
Taco Bell
City garbage collection
A Gordito Combo
Waste Management, Inc.
Waste Management, Inc.
20% tax
Private garbage collection
Waste Management, Inc.
Private garbage collection
Local Police Dept.
Waste Management, Inc.