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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