Circular flow jena
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The document describes the circular flow of economic activities between households and firms. It explains that households receive income from firms and use it to purchase goods and services from firms in product markets. Firms use the income to purchase factors of production like labor, capital, land, and entrepreneurship from households in factor markets. The circular flow illustrates how spending and earnings are interconnected between households and businesses in a stable economy.
Circular flow jena
- 1. March 7, 2012 Sample footer 1
- 2. Types of Flows : Real Flow: Factors of production and the goods and services. Money Flow: Monetary flows between different sectors. March 7, 2012 Sample footer 2
- 3. Circular-Flow of Economic Activities: A household is a person or a group of people that share their income. A firm is an organization that produces goods and services for sale. Firms sell goods and services that they produce to households in markets for goods and services. Firms buy the resources they need to produce—factors of production—in factor markets. March 7, 2012 Sample footer 3
- 4. Stable Economy, Contracting Economy, Expanding Economy : Higher March 7, 2012 Sample footer 4
- 5. Imports & Exports: Fiscal Deficit and Fiscal Surplus India Trade: Imports India Trade: Exports Precious stones Petroleum products Fertilizer Machinery Iron and steel Iron and steel Gold & Silver Chemicals Electronic Goods Vehicles Machinery other than Electrical Apparel Organic & Inorganic Chemicals Computer software Metalliferous Ores & Products Coal March 7, 2012 Equipment Transport Sample footer 5
- 6. Product Markets Transactions in which households buy goods March 7, 2012 Sample footer 6
- 7. Factor Markets Transactions in which businesses buy resources March 7, 2012 Sample footer 7
- 8. Total Income Wages, rent, interest, profits March 7, 2012 Sample footer 8
- 9. Two Sector Economy: Copyright © 2008 Pearson Addison Wesley. All rights 8-9 reserved.
- 10. Withdrawals and Injections: Factor incomes Injections (+) Withdrawals (-) Households Firms Withdrawals (-) Injections (+): Savings: S=Y-C Investment, Govt exp and Expenditure on goods exports and services March 7, 2012 Sample footer 10
- 11. Three sector economy: March 7, 2012 Sample footer 11
- 12. Four sectors Economy: Wages, rents, interest, profits Factor services Goods Firms (production) Household Government Financial markets Personal consumption Other countries McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
- 13. March 7, 2012 Sample footer 13
Editor's Notes
- #6: Total Exports by India : 2010-11->Rs. 9,00,471 CrTotal Imports by India: 2007-08->Rs. 949,133 Cr.Current Fiscal Deficit : 5.5% of GDP
- #11: Withdrawal(leakage) is generated in the production of national output, hence it is not a part of national output. Injection is the amount of money which is spent by different sectors in the economy which is in addition to the incomes generated in the circular flow of income.
- #12: Part of the flows from the households and from the firms goes to government in the form of taxes.Part of the tax revenue is spent by the govt as govt exp to provide services and transfer payments to the households. Part of the tax revenue is spent by the govt on purchase of goods and subsidies to the firms.
- #13: If exports are less than imports X< M, foreign trade deficit, Un favorable balance of trade Exports are greater than imports X>M, foreign trade surplus - favorable balance of trade.