1. Using the Factors of Production
Circular Flow
Using the Factors of Production

2. Working Economy Individual markets must all fit together
Households- own the resources of production
They must sell those resources to the business in exchange for income

3. Business Sector
They buy the factors of production from households, produce goods, and sell the finished product back to the household for revenue
This cycle is continuous and essential for market survival

4. Financial Institutions
Form a link between savers and investors
Households place remaining income in financial institutions, which is then loaned to businesses for investment
Financial Institutions serve as an intermediary in the circular flow model

5. The Government’s Role
Collect taxes and provide public goods that private business can’t provide
Provided protection and security from the government contributes to circular success

6. Government Tax Reliance
Local- property
State- sales and income
Federal- income and social security