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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 • • • • • • 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 • • • • Page 63 – Applying Economic Skills Minicase: The Boeing Company Layoffs One answer sheet per table Due at end of the hour