The circular flow of income

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The circular flow of income

  1. 1. The CircularFlow of Income
  2. 2. The circular flow of income The interdependence of goods markets and factor markets
  3. 3. The interdependence of goods and factor markets FIRMS (suppliers of goods and services, demanders of factor services) HOUSEHOLDS (demanders of goods and services, suppliers of factor services)
  4. 4. The interdependence of goods and factor (3) markets (2) Factor £ £ Producerdemand supply Factor Goods servicesP P S SPF2 P2PF1 P1 D2 D2 D1 D1 O QF 1 QF 2 Q O Q1 Q2 Q Factor services Goods (4) (1)Factor £ £ Consumersupply demand
  5. 5. Consumption, injections,of incomeand The circular flow withdrawals equilibrium
  6. 6. The circular flow of income Firms Consumption of Factor domesticallypayments produced goods and services (Cd) Households
  7. 7. The circular flow of income INJECTIONS Export expenditure (X) Investment (I) Government Consumption of expenditure (G) Factor domestically BANKS, etc GOV. ABROADpayments produced goods and services (Cd) Import Net expenditure (M) Net taxes (T) saving (S) WITHDRAWALS

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