circular flow of money, goods, and services

• Government spending is financed by taxes or borrowing from the public.
• Taxes are paid to the government by households and businesses.
• A factor/input market is a market where businesses purchase, rent, or hire what they need in order to produce their goods and services.
• Money goes from households to output markets through expenditures
• Goods and services go from households to factor markets through factors of production
• Imports and Exports go from Firms and Households to Foreign sectors
• Money, goods, and services go between business firms and government through taxes and public goods and services.
• The circular flow model shows how money flows around an economy as it produces and consumes goods and services.
• Income earned by households can be used to buy consumer goods and services produced by businesses.
• Businesses use income earned from selling products to pay workers wages and salaries, which then become household income.
• Household income is the total amount of money that households get from the factors of production they give to input markets.
• What is the money that the household doesn't spend?

  Savings
• What is the money that consumers, markets, and firms give to the government in exchange of public goods and infrastructures?

  Tax
• For equilibrium to be maintained, the government should properly allocate tax, account for money spent, and be transparent in using the money.
• Ideally, for the model to work, the income of firms needs to be equal to the expenditure of households.
• Which specific cycle is clockwise?

  Money
• which specific cycle is counterclockwise?

  Products and services
• What is the money consumers get in exchange for service?

  Income
• What is the money given by firms to the input market?


  Money, interest, rent, profit