Scribd
Upload
6 views2 pages

Basic Microeconomics

jg

Uploaded by

ellenjoyvilla37
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
6 views2 pages

Basic Microeconomics

jg

Uploaded by

ellenjoyvilla37
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

BASIC MICROECONOMICS

(SUBJECT)

SUBMITTED BY:
ELLEN JOY M. VILLA BSBA 2- HRDM

SUBMITTED TO:
MRS. PI ZETA FABILLAR
CIRCULAR FLOW DIAGRAM:
The circular flow diagram is a visual model that illustrates how money and goods
move through an economy. It typically shows the interactions between two main
groups: households and firms.

Key Components:

1. Households:
o Individuals or groups that provide factors of production (like labor) to
firms.
o Receive income in the form of wages, rent, dividends, etc.
2. Firms:
o Businesses that produce goods and services.
o Use the factors of production from households to create products,
which they sell in the market.

Flows:

1. Real Flow:
o From Households to Firms: Households provide labor and resources
to firms.
o From Firms to Households: Firms provide goods and services to
households.
2. Monetary Flow:
o From Firms to Households: Firms pay households for their labor and
resources.
o From Households to Firms: Households spend money to purchase
goods and services from firms.

Additional Elements:

 Government: Can be included to show how taxes and public spending affect
the flow.
 Financial Markets: Show how savings and investments circulate money.
 Foreign Sector: Includes exports and imports, highlighting global trade
impacts.

Purpose:

The circular flow diagram helps to visualize how economic activities are
interconnected, emphasizing the continuous movement of money and resources in
an economy. It also illustrates the interdependencies between different economic
agents.

You might also like