Circular flow Diagram

• What are the 4 main point of the Circular Flow diagram?

  market for goods/services, market for input, firm, household
• What does Firm do?

  production
• What does Household do?

  buying
• Markets for goods/services -> Households?

  goods/services
• Household -> Market for Input?

  labor, capital
• Market for Input -> Firms?

  factors of production
• Firms -> Market for goods/services?

  goods/services
• Firm -> Market for Input?

  cost
• Market for Input -> Household?

  income
• Household -> Market for goods/services?


  expenditures
• Market for goods/services -> Firm?

  revenue