Download Economics

Warmup/Journal #7
• Pick up, read, and summarize the article titled
“China’s Economy is on Track to Surpass the
U.S. by 2035
• Also answer if you think this is an accurate
article and explain why or why not.
• ½ page minimum
Economics
Unit 2: Competitive Markets
Lesson 8: Circular Flow
Circular Flow Model
• A tool for understanding how the U.S.
economy or any market based economy
operates.
Economic Actors
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2 Economic Actors
Consumers = Households
Producers = Business Firms
2 Markets
Product markets – goods and services
Resource markets – land, labor, capital,
entrepreneurship
Economic Actors continued
• These markets do not have a single location
and they reflect the supply and demand for
any resource
• Financial markets establish interest rates
• Labor markets establish the wages required to
hire workers
Key Points of Circular Flow
• Households are both buyers & sellers – buy
goods & services in product market – also sell
resources – land, labor, capital in the
resource market
• Business firms are both buyers & sellers – in
product market sell what they produce – in
resource market buys the resources of
individuals
Key Points of Circular Flow
• $$$ also flows in one direction
• Resources & products always flow in the
opposite direction
• Every action in circular flow has a reaction –
every dollar spent in the product market
becomes a dollar of income to someone
• Ex. Can of corn
• Infinite number of transactions using circular
flow model
Read pg. 62 in Book
• Answer in your notes how each of the three
economic questions are answered using the
circular flow model
Cooperative Group Work
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Page 63 – Applying Economic Skills
Minicase: The Boeing Company Layoffs
One answer sheet per table
Due at end of the hour