Download Circular Flow of Economic Activity

Circular Flow of
Economic Activity
Draw Diagram
Product Market
Foreign Sector
Gov’t Sector
Consumer
Sector
Business Sector
Factor Market
Consumer Sector
Earn money through the
factor market
Factor Market—
where the worker
earns money in
exchange for labor
where resources are
bought and sold
Business Sector
Sells goods and
services to consumers
Product Market
Where money is
spent
Where producers
offer goods and
services for sale
Foreign Sector
Only sector to sell in and out of
the country
Effects our economic
interdependence—extent to which
one country depends on other
countries
Government Sector
Also produces goods and
services
Example – tools for
national defense
Earns money for all
services sold
Earns most money from
taxes collected