Outline the flow of goods and resources to and from economic decision makers One

Question

Outline the flow of goods and resources to and from economic decision makers One way to understand how the economy works is the circular flow model. This model demonstrates the flow of resources, goods, services, and income between households and business through the resource market and the market for goods and services. In a few paragraphs, please:

1) Identify the primary economic decision makers.

2) Describe how money and resources are exchanged in the resource market, indicating Who gets the resource Who gets the income

3) Describe how money, goods, and services are exchanged in the product and services market, indicating Who receives the goods and services Who gets the income

4) In addition, give a brief description of any other participants in an economy that are not represented in this simple model

Refer to the Circular Flow model resources provided below:

The Circular Flow Diagram; http://econperspectives.blogspot.com/2008/04/circular-flow-diagram.html

Circular Flow of Economic Activity: The Flow of Goods, Services & Resources

http://study.com/academy/lesson/circular-flow-of-economic-activity-the-flow-of-goods-services-resources.html

Resource Market: Definition & Overview; http://study.com/academy/lesson/resource-market-definition-lesson-quiz.html

In addition, it should be written well using correct grammar, and references need to be properly APA formatted

Explanation / Answer

1) Producers and consumers are primary decision makers.

2) Household sectors are owners of resources like Land, Labor, Capital and Entrepreneurs for which they receive rent, wages, interest and profit respectuvely. Resources go to the producers and income to households.

3) Firms are the producers of Goods and services which they offer to consumers in household sector at market price. Money goes to firms and goods and services to household.

4) Government and Foreign sector are important participants which are missing in simple model.

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