Circular Flow Model Notes:
What is Circular Flow?
- It represents transactions in an economy by flows around a circle.
What is Household?
- It is a person or a group who share an income.
What is a Firm/Business?
- Organization that produces goods and services for sell.
What is a Factor Market? (Resource Market)
- Firms buy.
- Households sell.
What is a Product Market?
- Firms sell.
- Households buy.
What is Household role?
- Sells resources.
- Buys products.
What is a Firm/Business role?
- They buy resources.
- Sell products.
What is the Governments role?
- Both consumers & produces in both markets.
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