Circular Flow Diagram: It represents the transactions in an
economy
Product Market: The place where goods and services are
produced by businesses [Goods & Services]
Factor Market: The place where households sell resources
and businesses buy resources.
Firms: Organizations that produce goods and
services for sale.
Households: A person or group of people that share
their income.
Awesome information about circular flow! What's also interesting, and might be good to add, is that there's other forms besides the two sector model posted; there's three, four, and five sector models as well that give more information about different things.
ReplyDeleteI love the way the information on your Circular Flow diagram is presented so clearly, but did you know that circular flow doesn't always work out. This is because there are some people who fall short of expectations and therefore their needs aren't met. This is why we are a really mixed economy and not a pure capitalist economy.
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