SlideShare a Scribd company logo
The Circular Flow of Economic
Activity
*
o Production
The use of economic resources in the creation
of goods and services for the satisfaction of human
wants.
o Employment
The use of economic resources in production;
engagement in activity.
o Consumption
The use of economic resources by consumer
purchasing or in the production of other goods.
*
oHousehold
It is the basic consuming unit.
oFirm
It is the basic producing unit.
*
o Flow
A quantity measured over a particular period of time.
o Stock
A quantity measured as of a given point in time.
o Wealth
Anything of value owned. It is a stock.
o Income
The rate at which we earn money. It is a flow.
*
oThe Circular Flow of the Production Process
*
Households Producing Units
Economic
Resources
Goods and
Services
oCircular Flow of Goods Among Production
Units
Raw Materials
Firm
Consumer
Final Goods
Firm
Intermediate
Goods Firm
oInterrelation Between Production Units and
Households
Households
Resources
Resources
Resources
Raw Material
Firm
Intermediate
Good Firm
Final Good
Firm
o The Circular Flow of Goods and Income Among Producers
and Households
*
Households
Resources
Money Payment for Resources
Resources
Money Payment for Resources
Resources
Money Payment for Resources
Money Payment for Purchase of Final Goods
Final Goods
Raw Material
Firm
Intermediate
Good Firm
Final Good Firm
oThe Circular Flow of Income
Households
Purchases
of Goods
and
Services
Producing
Units
Income
Flow of
Wages,
Interest,
Rents
oCircular Flow of Income Among Production Units
Raw Materials Firm
Money Payment for
Raw Materials
Intermediate Goods
Firm
Final Goods Firm
Money Payment for
Final Goods
Households
Money Payment for
Intermediate Goods
o Circular Flow of Physical Goods and Money Income
*
Economic Resources
Money Payment for
Purchase of Goods
and Services
Money Payment for
Economic Resources
Goods and Services
o The Circular Flow of Goods and Income of
Households and Firms with the Government and
Foreign Countries
H o u s e h o l d s
F o r e i g n
C o u n t r i e s
Producing Units
G o v e r n m e n t
Wages, Transfer Payments
Taxes
Economic Resources
Taxes
Purchase of Goods and Services
Money Payments
for Imports
Goods and Services
Income Payments of Wages, Rent, Dividends,
Interests
Purchase of Goods and Services
Money Payments
for Exports
Pr o d u c i n g
U n i t s
o Inflows – income that go inside the economy which
expand the flow of goods and services.
1. Investment
2. Government Expenditures
3. Exports
o Outflows – income that go outside the economy which
constrict the flow of goods and services.
1. Savings
2. Taxes
3. Imports
*
o The Circular Flow of Economic Activity Reflecting
the Inflows and the Outflows
Economic Resources
Income Payments of Wages, Rent, Dividends,
Interests
Purchase of Goods and Services
Households Producing Units
Goods and Services
Imports Foreign Countries Exports
Investments
Government
Banks
Expenditures
Taxes
Savings
Outflows are difficult to control because
they are dependent on income. When
income increases, we expect savings, taxes,
and imports.
Inflows are easier to manipulate. The
proper use of policy enables the
government to encouragement exports and
investments and to increase its
expenditures when it desires to expand the
flow of economic activity.
1. Monetary Policy – affects savings,
investments, and money supply.
2. Fiscal Policy – control taxes and
government expenditures.
3. Trade Policy – affects a country’s imports
and exports.
*

More Related Content

What's hot

Variable costing & absorption costing
Variable costing & absorption costingVariable costing & absorption costing
Variable costing & absorption costing
naimhossain8
 
Measuring National Output and National Income
Measuring National Output and National IncomeMeasuring National Output and National Income
Measuring National Output and National Income
Noel Buensuceso
 
Macroeconomics
Macroeconomics Macroeconomics
Macroeconomics
RebekahSamuel2
 
Ad as
Ad asAd as
Ad as
cmsrahaman
 
Responsibility accounting and transfer pricing
Responsibility accounting and transfer pricingResponsibility accounting and transfer pricing
Responsibility accounting and transfer pricing
Charlotte Ann Grace Bance
 
Pawnshop Chapter 7
Pawnshop Chapter 7Pawnshop Chapter 7
Pawnshop Chapter 7
Yokimura Dimaunahan
 
Allocation & Economic Systems
Allocation & Economic SystemsAllocation & Economic Systems
Allocation & Economic Systems
Sue Quirante
 
Accounting Cycle of a Merchandising Business
Accounting Cycle of a Merchandising BusinessAccounting Cycle of a Merchandising Business
Accounting Cycle of a Merchandising Business
LouieCarreon3
 
Measuring the Cost of Living
Measuring the Cost of LivingMeasuring the Cost of Living
Measuring the Cost of Living
Tuul Tuul
 
The Short-Run Tradeoff between Inflation and Unemployment
The Short-Run Tradeoff between Inflation and UnemploymentThe Short-Run Tradeoff between Inflation and Unemployment
The Short-Run Tradeoff between Inflation and Unemployment
Tuul Tuul
 
Circular Flow of Income
Circular Flow of IncomeCircular Flow of Income
Circular Flow of Income
Manish Purani
 
World economies power point
World economies power pointWorld economies power point
World economies power point
Monica Martinez
 
Customer supplier model
Customer supplier modelCustomer supplier model
Customer supplier model
Mohit Singla
 
Price ceilings & price floors
Price ceilings & price floorsPrice ceilings & price floors
Price ceilings & price floors
Ryan Shams
 
Inflation and Unemployment
Inflation and UnemploymentInflation and Unemployment
Inflation and Unemployment
toconnor127
 
Production function
Production functionProduction function
Production function
Abhinav Sinha
 
Application: The Costs of Taxation
Application:The Costs of TaxationApplication:The Costs of Taxation
Application: The Costs of Taxation
Tuul Tuul
 
The Circular Flow of Economic Activity
The Circular Flow of Economic ActivityThe Circular Flow of Economic Activity
The Circular Flow of Economic Activity
Gregar Donaven Valdehueza
 
Introduction to economics
Introduction to economicsIntroduction to economics
Introduction to economics
Mr. Fields' Class
 
Market structure
Market structureMarket structure
Market structure
Yashika Parekh
 

What's hot (20)

Variable costing & absorption costing
Variable costing & absorption costingVariable costing & absorption costing
Variable costing & absorption costing
 
Measuring National Output and National Income
Measuring National Output and National IncomeMeasuring National Output and National Income
Measuring National Output and National Income
 
Macroeconomics
Macroeconomics Macroeconomics
Macroeconomics
 
Ad as
Ad asAd as
Ad as
 
Responsibility accounting and transfer pricing
Responsibility accounting and transfer pricingResponsibility accounting and transfer pricing
Responsibility accounting and transfer pricing
 
Pawnshop Chapter 7
Pawnshop Chapter 7Pawnshop Chapter 7
Pawnshop Chapter 7
 
Allocation & Economic Systems
Allocation & Economic SystemsAllocation & Economic Systems
Allocation & Economic Systems
 
Accounting Cycle of a Merchandising Business
Accounting Cycle of a Merchandising BusinessAccounting Cycle of a Merchandising Business
Accounting Cycle of a Merchandising Business
 
Measuring the Cost of Living
Measuring the Cost of LivingMeasuring the Cost of Living
Measuring the Cost of Living
 
The Short-Run Tradeoff between Inflation and Unemployment
The Short-Run Tradeoff between Inflation and UnemploymentThe Short-Run Tradeoff between Inflation and Unemployment
The Short-Run Tradeoff between Inflation and Unemployment
 
Circular Flow of Income
Circular Flow of IncomeCircular Flow of Income
Circular Flow of Income
 
World economies power point
World economies power pointWorld economies power point
World economies power point
 
Customer supplier model
Customer supplier modelCustomer supplier model
Customer supplier model
 
Price ceilings & price floors
Price ceilings & price floorsPrice ceilings & price floors
Price ceilings & price floors
 
Inflation and Unemployment
Inflation and UnemploymentInflation and Unemployment
Inflation and Unemployment
 
Production function
Production functionProduction function
Production function
 
Application: The Costs of Taxation
Application:The Costs of TaxationApplication:The Costs of Taxation
Application: The Costs of Taxation
 
The Circular Flow of Economic Activity
The Circular Flow of Economic ActivityThe Circular Flow of Economic Activity
The Circular Flow of Economic Activity
 
Introduction to economics
Introduction to economicsIntroduction to economics
Introduction to economics
 
Market structure
Market structureMarket structure
Market structure
 

Similar to Chapter 2 - The Circular Flow of Economic Activity.pptx

National Income and Circular Flow of Income
National Income and Circular Flow of IncomeNational Income and Circular Flow of Income
National Income and Circular Flow of Income
Manish Purani
 
MACRO ECONOMICS COMPLETE NOTES class pdf
MACRO ECONOMICS COMPLETE NOTES class pdfMACRO ECONOMICS COMPLETE NOTES class pdf
MACRO ECONOMICS COMPLETE NOTES class pdf
jhdesai6957
 
Gross domestic product
Gross domestic productGross domestic product
Gross domestic product
dadamimi
 
National Income Accounting
National Income AccountingNational Income Accounting
National Income Accounting
Ellie Urbana
 
National income accounting
National income accountingNational income accounting
National income accounting
Arpan Ramtek
 
Macro economic Handout 01 introuction.pptx
Macro economic Handout 01 introuction.pptxMacro economic Handout 01 introuction.pptx
Macro economic Handout 01 introuction.pptx
Hashan S. Wimalasiri
 
National income and related aggregates
National income and related aggregatesNational income and related aggregates
National income and related aggregates
AmiteshYadav7
 
Circular Flow of Inclome.ppt
Circular Flow of Inclome.pptCircular Flow of Inclome.ppt
Circular Flow of Inclome.ppt
monica400751
 
Theory and Measurement in the Macroeconomy
Theory and Measurement in the MacroeconomyTheory and Measurement in the Macroeconomy
Theory and Measurement in the Macroeconomy
Kalaiyarasi Danabalan
 
nationalincomeandrelatedaggregates-170922155401.pptx
nationalincomeandrelatedaggregates-170922155401.pptxnationalincomeandrelatedaggregates-170922155401.pptx
nationalincomeandrelatedaggregates-170922155401.pptx
Abhishek180946
 
National income
National incomeNational income
National income
Daksh Bapna
 
Unit 1 circular flow of income
Unit   1 circular flow of incomeUnit   1 circular flow of income
Unit 1 circular flow of income
Ritvik Tolumbia
 
National income
National incomeNational income
National income
Abdul Subhan Shaikh
 
Economics ppt
Economics pptEconomics ppt
Economics ppt
Saima Pervaiz
 
Nation's Income PowerPoint presentation.
Nation's Income PowerPoint presentation.Nation's Income PowerPoint presentation.
Nation's Income PowerPoint presentation.
GirlieBalingbing
 
National Income (Unit 2) by Dr. Abhay Singh Chauhan
National Income (Unit 2) by Dr. Abhay Singh ChauhanNational Income (Unit 2) by Dr. Abhay Singh Chauhan
National Income (Unit 2) by Dr. Abhay Singh Chauhan
Dr. Abhay Singh Chauhan
 
Measuring economicperformance
Measuring economicperformanceMeasuring economicperformance
Measuring economicperformance
Ella Ako
 
Lecture 1.pptx
Lecture 1.pptxLecture 1.pptx
Lecture 1.pptx
RAKIBUDDINCHOWDHURY1
 
Chapter 23 astronomy concept and exercise.pptx
Chapter 23 astronomy concept and exercise.pptxChapter 23 astronomy concept and exercise.pptx
Chapter 23 astronomy concept and exercise.pptx
ZahraAnjum4
 
National income
National incomeNational income
National income
naveen binwal
 

Similar to Chapter 2 - The Circular Flow of Economic Activity.pptx (20)

National Income and Circular Flow of Income
National Income and Circular Flow of IncomeNational Income and Circular Flow of Income
National Income and Circular Flow of Income
 
MACRO ECONOMICS COMPLETE NOTES class pdf
MACRO ECONOMICS COMPLETE NOTES class pdfMACRO ECONOMICS COMPLETE NOTES class pdf
MACRO ECONOMICS COMPLETE NOTES class pdf
 
Gross domestic product
Gross domestic productGross domestic product
Gross domestic product
 
National Income Accounting
National Income AccountingNational Income Accounting
National Income Accounting
 
National income accounting
National income accountingNational income accounting
National income accounting
 
Macro economic Handout 01 introuction.pptx
Macro economic Handout 01 introuction.pptxMacro economic Handout 01 introuction.pptx
Macro economic Handout 01 introuction.pptx
 
National income and related aggregates
National income and related aggregatesNational income and related aggregates
National income and related aggregates
 
Circular Flow of Inclome.ppt
Circular Flow of Inclome.pptCircular Flow of Inclome.ppt
Circular Flow of Inclome.ppt
 
Theory and Measurement in the Macroeconomy
Theory and Measurement in the MacroeconomyTheory and Measurement in the Macroeconomy
Theory and Measurement in the Macroeconomy
 
nationalincomeandrelatedaggregates-170922155401.pptx
nationalincomeandrelatedaggregates-170922155401.pptxnationalincomeandrelatedaggregates-170922155401.pptx
nationalincomeandrelatedaggregates-170922155401.pptx
 
National income
National incomeNational income
National income
 
Unit 1 circular flow of income
Unit   1 circular flow of incomeUnit   1 circular flow of income
Unit 1 circular flow of income
 
National income
National incomeNational income
National income
 
Economics ppt
Economics pptEconomics ppt
Economics ppt
 
Nation's Income PowerPoint presentation.
Nation's Income PowerPoint presentation.Nation's Income PowerPoint presentation.
Nation's Income PowerPoint presentation.
 
National Income (Unit 2) by Dr. Abhay Singh Chauhan
National Income (Unit 2) by Dr. Abhay Singh ChauhanNational Income (Unit 2) by Dr. Abhay Singh Chauhan
National Income (Unit 2) by Dr. Abhay Singh Chauhan
 
Measuring economicperformance
Measuring economicperformanceMeasuring economicperformance
Measuring economicperformance
 
Lecture 1.pptx
Lecture 1.pptxLecture 1.pptx
Lecture 1.pptx
 
Chapter 23 astronomy concept and exercise.pptx
Chapter 23 astronomy concept and exercise.pptxChapter 23 astronomy concept and exercise.pptx
Chapter 23 astronomy concept and exercise.pptx
 
National income
National incomeNational income
National income
 

More from ChelseaAnneVidallo

FINAL WITHHOLDING
FINAL WITHHOLDINGFINAL WITHHOLDING
FINAL WITHHOLDING
ChelseaAnneVidallo
 
INCOME PAYMENT SUBJECT TO CREDITABLE WITHHOLDING TAX.docx
INCOME PAYMENT SUBJECT TO CREDITABLE WITHHOLDING TAX.docxINCOME PAYMENT SUBJECT TO CREDITABLE WITHHOLDING TAX.docx
INCOME PAYMENT SUBJECT TO CREDITABLE WITHHOLDING TAX.docx
ChelseaAnneVidallo
 
BIR FORM.docx
BIR FORM.docxBIR FORM.docx
BIR FORM.docx
ChelseaAnneVidallo
 
Chapter 9 - Inflation.pptx
Chapter 9 - Inflation.pptxChapter 9 - Inflation.pptx
Chapter 9 - Inflation.pptx
ChelseaAnneVidallo
 
Chapter 5 - Consumption and Savings.pptx
Chapter 5 - Consumption and Savings.pptxChapter 5 - Consumption and Savings.pptx
Chapter 5 - Consumption and Savings.pptx
ChelseaAnneVidallo
 
Chapter 12 - International Trade Practices and Policies.pptx
Chapter 12 - International Trade Practices and Policies.pptxChapter 12 - International Trade Practices and Policies.pptx
Chapter 12 - International Trade Practices and Policies.pptx
ChelseaAnneVidallo
 
Chapter 3 - An Introduction to Demand and Supply.ppt
Chapter 3 - An Introduction to Demand and Supply.pptChapter 3 - An Introduction to Demand and Supply.ppt
Chapter 3 - An Introduction to Demand and Supply.ppt
ChelseaAnneVidallo
 
Chapter 10 - Monetary Policy.pptx
Chapter 10 - Monetary Policy.pptxChapter 10 - Monetary Policy.pptx
Chapter 10 - Monetary Policy.pptx
ChelseaAnneVidallo
 
Chapter 6 -The Investment Function.pptx
Chapter 6 -The Investment Function.pptxChapter 6 -The Investment Function.pptx
Chapter 6 -The Investment Function.pptx
ChelseaAnneVidallo
 
Chapter 7 - National Income Determination.pptx
Chapter 7 - National Income Determination.pptxChapter 7 - National Income Determination.pptx
Chapter 7 - National Income Determination.pptx
ChelseaAnneVidallo
 
Chapter 11 - Fiscal Policy.pptx
Chapter 11 - Fiscal Policy.pptxChapter 11 - Fiscal Policy.pptx
Chapter 11 - Fiscal Policy.pptx
ChelseaAnneVidallo
 
Chapter 8 - Labor and Employment.pptx
Chapter 8 - Labor and Employment.pptxChapter 8 - Labor and Employment.pptx
Chapter 8 - Labor and Employment.pptx
ChelseaAnneVidallo
 
Chapter 4 - National Income Accounting.ppt
Chapter 4 - National Income Accounting.pptChapter 4 - National Income Accounting.ppt
Chapter 4 - National Income Accounting.ppt
ChelseaAnneVidallo
 
Chapter 1 - Introduction.pptx
Chapter 1 - Introduction.pptxChapter 1 - Introduction.pptx
Chapter 1 - Introduction.pptx
ChelseaAnneVidallo
 

More from ChelseaAnneVidallo (14)

FINAL WITHHOLDING
FINAL WITHHOLDINGFINAL WITHHOLDING
FINAL WITHHOLDING
 
INCOME PAYMENT SUBJECT TO CREDITABLE WITHHOLDING TAX.docx
INCOME PAYMENT SUBJECT TO CREDITABLE WITHHOLDING TAX.docxINCOME PAYMENT SUBJECT TO CREDITABLE WITHHOLDING TAX.docx
INCOME PAYMENT SUBJECT TO CREDITABLE WITHHOLDING TAX.docx
 
BIR FORM.docx
BIR FORM.docxBIR FORM.docx
BIR FORM.docx
 
Chapter 9 - Inflation.pptx
Chapter 9 - Inflation.pptxChapter 9 - Inflation.pptx
Chapter 9 - Inflation.pptx
 
Chapter 5 - Consumption and Savings.pptx
Chapter 5 - Consumption and Savings.pptxChapter 5 - Consumption and Savings.pptx
Chapter 5 - Consumption and Savings.pptx
 
Chapter 12 - International Trade Practices and Policies.pptx
Chapter 12 - International Trade Practices and Policies.pptxChapter 12 - International Trade Practices and Policies.pptx
Chapter 12 - International Trade Practices and Policies.pptx
 
Chapter 3 - An Introduction to Demand and Supply.ppt
Chapter 3 - An Introduction to Demand and Supply.pptChapter 3 - An Introduction to Demand and Supply.ppt
Chapter 3 - An Introduction to Demand and Supply.ppt
 
Chapter 10 - Monetary Policy.pptx
Chapter 10 - Monetary Policy.pptxChapter 10 - Monetary Policy.pptx
Chapter 10 - Monetary Policy.pptx
 
Chapter 6 -The Investment Function.pptx
Chapter 6 -The Investment Function.pptxChapter 6 -The Investment Function.pptx
Chapter 6 -The Investment Function.pptx
 
Chapter 7 - National Income Determination.pptx
Chapter 7 - National Income Determination.pptxChapter 7 - National Income Determination.pptx
Chapter 7 - National Income Determination.pptx
 
Chapter 11 - Fiscal Policy.pptx
Chapter 11 - Fiscal Policy.pptxChapter 11 - Fiscal Policy.pptx
Chapter 11 - Fiscal Policy.pptx
 
Chapter 8 - Labor and Employment.pptx
Chapter 8 - Labor and Employment.pptxChapter 8 - Labor and Employment.pptx
Chapter 8 - Labor and Employment.pptx
 
Chapter 4 - National Income Accounting.ppt
Chapter 4 - National Income Accounting.pptChapter 4 - National Income Accounting.ppt
Chapter 4 - National Income Accounting.ppt
 
Chapter 1 - Introduction.pptx
Chapter 1 - Introduction.pptxChapter 1 - Introduction.pptx
Chapter 1 - Introduction.pptx
 

Recently uploaded

An Overview of the Prosocial dHEDGE Vault works
An Overview of the Prosocial dHEDGE Vault worksAn Overview of the Prosocial dHEDGE Vault works
An Overview of the Prosocial dHEDGE Vault works
Colin R. Turner
 
How Non-Banking Financial Companies Empower Startups With Venture Debt Financing
How Non-Banking Financial Companies Empower Startups With Venture Debt FinancingHow Non-Banking Financial Companies Empower Startups With Venture Debt Financing
How Non-Banking Financial Companies Empower Startups With Venture Debt Financing
Vighnesh Shashtri
 
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdfTumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
Henry Tapper
 
一比一原版(UoB毕业证)伯明翰大学毕业证如何办理
一比一原版(UoB毕业证)伯明翰大学毕业证如何办理一比一原版(UoB毕业证)伯明翰大学毕业证如何办理
一比一原版(UoB毕业证)伯明翰大学毕业证如何办理
nexop1
 
1. Elemental Economics - Introduction to mining.pdf
1. Elemental Economics - Introduction to mining.pdf1. Elemental Economics - Introduction to mining.pdf
1. Elemental Economics - Introduction to mining.pdf
Neal Brewster
 
Seminar: Gender Board Diversity through Ownership Networks
Seminar: Gender Board Diversity through Ownership NetworksSeminar: Gender Board Diversity through Ownership Networks
Seminar: Gender Board Diversity through Ownership Networks
GRAPE
 
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdf
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdfBONKMILLON Unleashes Its Bonkers Potential on Solana.pdf
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdf
coingabbar
 
一比一原版(GWU,GW毕业证)加利福尼亚大学|尔湾分校毕业证如何办理
一比一原版(GWU,GW毕业证)加利福尼亚大学|尔湾分校毕业证如何办理一比一原版(GWU,GW毕业证)加利福尼亚大学|尔湾分校毕业证如何办理
一比一原版(GWU,GW毕业证)加利福尼亚大学|尔湾分校毕业证如何办理
obyzuk
 
Bridging the gap: Online job postings, survey data and the assessment of job ...
Bridging the gap: Online job postings, survey data and the assessment of job ...Bridging the gap: Online job postings, survey data and the assessment of job ...
Bridging the gap: Online job postings, survey data and the assessment of job ...
Labour Market Information Council | Conseil de l’information sur le marché du travail
 
Economic Risk Factor Update: June 2024 [SlideShare]
Economic Risk Factor Update: June 2024 [SlideShare]Economic Risk Factor Update: June 2024 [SlideShare]
Economic Risk Factor Update: June 2024 [SlideShare]
Commonwealth
 
Instant Issue Debit Cards
Instant Issue Debit CardsInstant Issue Debit Cards
Instant Issue Debit Cards
egoetzinger
 
Instant Issue Debit Cards - School Designs
Instant Issue Debit Cards - School DesignsInstant Issue Debit Cards - School Designs
Instant Issue Debit Cards - School Designs
egoetzinger
 
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...
AntoniaOwensDetwiler
 
OAT_RI_Ep20 WeighingTheRisks_May24_Trade Wars.pptx
OAT_RI_Ep20 WeighingTheRisks_May24_Trade Wars.pptxOAT_RI_Ep20 WeighingTheRisks_May24_Trade Wars.pptx
OAT_RI_Ep20 WeighingTheRisks_May24_Trade Wars.pptx
hiddenlevers
 
一比一原版(UCSB毕业证)圣芭芭拉分校毕业证如何办理
一比一原版(UCSB毕业证)圣芭芭拉分校毕业证如何办理一比一原版(UCSB毕业证)圣芭芭拉分校毕业证如何办理
一比一原版(UCSB毕业证)圣芭芭拉分校毕业证如何办理
bbeucd
 
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...
mayaclinic18
 
1.2 Business Ideas Business Ideas Busine
1.2 Business Ideas Business Ideas Busine1.2 Business Ideas Business Ideas Busine
1.2 Business Ideas Business Ideas Busine
Lawrence101
 
一比一原版(UCL毕业证)伦敦大学|学院毕业证如何办理
一比一原版(UCL毕业证)伦敦大学|学院毕业证如何办理一比一原版(UCL毕业证)伦敦大学|学院毕业证如何办理
一比一原版(UCL毕业证)伦敦大学|学院毕业证如何办理
otogas
 
Money20/20 and EU Networking Event of 20/24!
Money20/20 and EU Networking Event of 20/24!Money20/20 and EU Networking Event of 20/24!
Money20/20 and EU Networking Event of 20/24!
FinTech Belgium
 
How Does CRISIL Evaluate Lenders in India for Credit Ratings
How Does CRISIL Evaluate Lenders in India for Credit RatingsHow Does CRISIL Evaluate Lenders in India for Credit Ratings
How Does CRISIL Evaluate Lenders in India for Credit Ratings
Shaheen Kumar
 

Recently uploaded (20)

An Overview of the Prosocial dHEDGE Vault works
An Overview of the Prosocial dHEDGE Vault worksAn Overview of the Prosocial dHEDGE Vault works
An Overview of the Prosocial dHEDGE Vault works
 
How Non-Banking Financial Companies Empower Startups With Venture Debt Financing
How Non-Banking Financial Companies Empower Startups With Venture Debt FinancingHow Non-Banking Financial Companies Empower Startups With Venture Debt Financing
How Non-Banking Financial Companies Empower Startups With Venture Debt Financing
 
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdfTumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
 
一比一原版(UoB毕业证)伯明翰大学毕业证如何办理
一比一原版(UoB毕业证)伯明翰大学毕业证如何办理一比一原版(UoB毕业证)伯明翰大学毕业证如何办理
一比一原版(UoB毕业证)伯明翰大学毕业证如何办理
 
1. Elemental Economics - Introduction to mining.pdf
1. Elemental Economics - Introduction to mining.pdf1. Elemental Economics - Introduction to mining.pdf
1. Elemental Economics - Introduction to mining.pdf
 
Seminar: Gender Board Diversity through Ownership Networks
Seminar: Gender Board Diversity through Ownership NetworksSeminar: Gender Board Diversity through Ownership Networks
Seminar: Gender Board Diversity through Ownership Networks
 
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdf
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdfBONKMILLON Unleashes Its Bonkers Potential on Solana.pdf
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdf
 
一比一原版(GWU,GW毕业证)加利福尼亚大学|尔湾分校毕业证如何办理
一比一原版(GWU,GW毕业证)加利福尼亚大学|尔湾分校毕业证如何办理一比一原版(GWU,GW毕业证)加利福尼亚大学|尔湾分校毕业证如何办理
一比一原版(GWU,GW毕业证)加利福尼亚大学|尔湾分校毕业证如何办理
 
Bridging the gap: Online job postings, survey data and the assessment of job ...
Bridging the gap: Online job postings, survey data and the assessment of job ...Bridging the gap: Online job postings, survey data and the assessment of job ...
Bridging the gap: Online job postings, survey data and the assessment of job ...
 
Economic Risk Factor Update: June 2024 [SlideShare]
Economic Risk Factor Update: June 2024 [SlideShare]Economic Risk Factor Update: June 2024 [SlideShare]
Economic Risk Factor Update: June 2024 [SlideShare]
 
Instant Issue Debit Cards
Instant Issue Debit CardsInstant Issue Debit Cards
Instant Issue Debit Cards
 
Instant Issue Debit Cards - School Designs
Instant Issue Debit Cards - School DesignsInstant Issue Debit Cards - School Designs
Instant Issue Debit Cards - School Designs
 
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...
 
OAT_RI_Ep20 WeighingTheRisks_May24_Trade Wars.pptx
OAT_RI_Ep20 WeighingTheRisks_May24_Trade Wars.pptxOAT_RI_Ep20 WeighingTheRisks_May24_Trade Wars.pptx
OAT_RI_Ep20 WeighingTheRisks_May24_Trade Wars.pptx
 
一比一原版(UCSB毕业证)圣芭芭拉分校毕业证如何办理
一比一原版(UCSB毕业证)圣芭芭拉分校毕业证如何办理一比一原版(UCSB毕业证)圣芭芭拉分校毕业证如何办理
一比一原版(UCSB毕业证)圣芭芭拉分校毕业证如何办理
 
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...
 
1.2 Business Ideas Business Ideas Busine
1.2 Business Ideas Business Ideas Busine1.2 Business Ideas Business Ideas Busine
1.2 Business Ideas Business Ideas Busine
 
一比一原版(UCL毕业证)伦敦大学|学院毕业证如何办理
一比一原版(UCL毕业证)伦敦大学|学院毕业证如何办理一比一原版(UCL毕业证)伦敦大学|学院毕业证如何办理
一比一原版(UCL毕业证)伦敦大学|学院毕业证如何办理
 
Money20/20 and EU Networking Event of 20/24!
Money20/20 and EU Networking Event of 20/24!Money20/20 and EU Networking Event of 20/24!
Money20/20 and EU Networking Event of 20/24!
 
How Does CRISIL Evaluate Lenders in India for Credit Ratings
How Does CRISIL Evaluate Lenders in India for Credit RatingsHow Does CRISIL Evaluate Lenders in India for Credit Ratings
How Does CRISIL Evaluate Lenders in India for Credit Ratings
 

Chapter 2 - The Circular Flow of Economic Activity.pptx

  • 1. The Circular Flow of Economic Activity *
  • 2. o Production The use of economic resources in the creation of goods and services for the satisfaction of human wants. o Employment The use of economic resources in production; engagement in activity. o Consumption The use of economic resources by consumer purchasing or in the production of other goods. *
  • 3. oHousehold It is the basic consuming unit. oFirm It is the basic producing unit. *
  • 4. o Flow A quantity measured over a particular period of time. o Stock A quantity measured as of a given point in time. o Wealth Anything of value owned. It is a stock. o Income The rate at which we earn money. It is a flow. *
  • 5. oThe Circular Flow of the Production Process * Households Producing Units Economic Resources Goods and Services
  • 6. oCircular Flow of Goods Among Production Units Raw Materials Firm Consumer Final Goods Firm Intermediate Goods Firm
  • 7. oInterrelation Between Production Units and Households Households Resources Resources Resources Raw Material Firm Intermediate Good Firm Final Good Firm
  • 8. o The Circular Flow of Goods and Income Among Producers and Households * Households Resources Money Payment for Resources Resources Money Payment for Resources Resources Money Payment for Resources Money Payment for Purchase of Final Goods Final Goods Raw Material Firm Intermediate Good Firm Final Good Firm
  • 9. oThe Circular Flow of Income Households Purchases of Goods and Services Producing Units Income Flow of Wages, Interest, Rents
  • 10. oCircular Flow of Income Among Production Units Raw Materials Firm Money Payment for Raw Materials Intermediate Goods Firm Final Goods Firm Money Payment for Final Goods Households Money Payment for Intermediate Goods
  • 11. o Circular Flow of Physical Goods and Money Income * Economic Resources Money Payment for Purchase of Goods and Services Money Payment for Economic Resources Goods and Services
  • 12. o The Circular Flow of Goods and Income of Households and Firms with the Government and Foreign Countries H o u s e h o l d s F o r e i g n C o u n t r i e s Producing Units G o v e r n m e n t Wages, Transfer Payments Taxes Economic Resources Taxes Purchase of Goods and Services Money Payments for Imports Goods and Services Income Payments of Wages, Rent, Dividends, Interests Purchase of Goods and Services Money Payments for Exports Pr o d u c i n g U n i t s
  • 13. o Inflows – income that go inside the economy which expand the flow of goods and services. 1. Investment 2. Government Expenditures 3. Exports o Outflows – income that go outside the economy which constrict the flow of goods and services. 1. Savings 2. Taxes 3. Imports *
  • 14. o The Circular Flow of Economic Activity Reflecting the Inflows and the Outflows Economic Resources Income Payments of Wages, Rent, Dividends, Interests Purchase of Goods and Services Households Producing Units Goods and Services Imports Foreign Countries Exports Investments Government Banks Expenditures Taxes Savings
  • 15. Outflows are difficult to control because they are dependent on income. When income increases, we expect savings, taxes, and imports. Inflows are easier to manipulate. The proper use of policy enables the government to encouragement exports and investments and to increase its expenditures when it desires to expand the flow of economic activity.
  • 16. 1. Monetary Policy – affects savings, investments, and money supply. 2. Fiscal Policy – control taxes and government expenditures. 3. Trade Policy – affects a country’s imports and exports. *