The Economic Problem

The circular flow of goods and incomes

• Goods and services

Modelling Economic Relationships

• The circular flow of income
• firms and households
• goods markets
• real flows: goods and services
• money flows: consumer expenditure

• Goods and services

• The circular flow of goods and incomes

• Goods and services

• £
• Consumer
• expenditure

• The circular flow of goods and incomes

Modelling Economic Relationships

• The circular flow of income
• firms and households
• goods markets
• real flows: goods and services
• money flows: consumer expenditure
• factor markets

Modelling Economic Relationships

• The circular flow of income
• firms and households
• goods markets
• real flows: goods and services
• money flows: consumer expenditure
• factor markets
• real flows: services of labour and other factors

• Goods and services

• £
• Consumer
• expenditure

• The circular flow of goods and incomes

• Goods and services

• £
• Consumer
• expenditure

• Services of factors of production (labour, etc.)

• The circular flow of goods and incomes

Modelling Economic Relationships

• The circular flow of income
• firms and households
• goods markets
• real flows: goods and services
• money flows: consumer expenditure
• factor markets
• real flows: services of labour and other factors
• money flows: wages and other incomes

• Goods and services

• £
• Consumer
• expenditure

• The circular flow of goods and incomes

• Services of factors of production (labour, etc.)

• Goods and services

• £
• Consumer
• expenditure

• Wages, rent,
• dividends, etc.
• £

• The circular flow of goods and incomes

• Services of factors of production (labour, etc.)