1. Economic Flow

2. We Buy Stuff Households Firms Represents all consumers.
Economic Flow
They
Sell
stuff We
Buy
Stuff
Products
Consumer expenditure
Households
Firms
Represents all consumers.
The people that work and
buy goods/services
Represents all
businesses.

3. How do households get money? How do firms make products?
Economic Flow
Products
Consumer expenditure
Households
Firms
How do households get money?
How do firms make products?

4. We sell our human resources
Economic Flow
Products
Consumer expenditure
Circular
Flow
Model
Households
Firms
They
Pay
us to
work
We sell our human resources
Wages, rent, dividends
Resources

5. Households Firms Products Resources Taxes Taxes Economic Flow
Consumer expenditure
Households
Firms
Wages, rent, dividends
Resources
Taxes
Taxes

6. Does the government suck money out of the cycle through taxes?NO

7. Does the government suck money out of the cycle through taxes?
firms
schools
households
police

8. Does the government suck money out of the cycle through taxes?
firms
households

9. Circular Flow Model Households Firms
Economic Flow
Products
Consumer expenditure
Tax dollars eventually go back to households.
The households then spend the money at firms.
Firms then pay households. And so on…
Circular
Flow
Model
Households
Firms
Wages, rent, dividends
Resources
Taxes
Taxes

10. Firms
-Buy: Resources from Households
-Sell: Products to Households
Households
-Buy: Products from Firms
-Sell: Resources to Firms
Banks
-Accept Deposits: Households earn interest
-Loan: To firms to expand business
Gov’t
-Taxes: redirect money in the economy