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Summary Economics : Circular Flow Part 1
My document has to do with Economics based on the Circular Flow. It includes the roles of the four main participants in the economy and their relationship with one another.
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Economics: The Circular Flow part 1Circular Flow
The circular flow shows the flow of spending, production and income
between the four main participants which are:
Households
Government (The state)
Businesses (Firms)
Foreign Sector
There are two types of economies:
Open economy: Which includes the households, government,
businesses and the foreign sector.
This means that there will be trading of imports and exports with
the foreign sector.
Closed economy: Which includes the households, government
and the businesses.
This means that there will be no trading of exports and imports
with the foreign sector.
Note
South Africa is an open economy.
The role of the participants
1. Households:
They are the major consumers of economic goods and service.
They are the owners of the factors of production namely natural
resources, capital, labor and entrepreneurship.
They sell the factors of production to the businesses(firms).
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