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) Describe how money and resources are exchanged in the resource market, indicating Who gets the resource Who gets the income (175 words)

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

Explanation / Answer

in business activities to produce the goods and services some resources are required, such as labour, land, capital, Organiser, in business activities business man will pay the money to those factors, in the production process the labour will be exchanged with wage, wages will be paid to labour day wise and weekly wise, land it is very important factor in production, rent will be paid to land, another factors is capital, it plays vital role in production process, householders will save money in banks and other financial institutions from these institutions the business mans will take loans and other financial support to produce the goods and services, interest will be paid to banks and financial institutions, these institutions will pay interest to the householders, we can understand here to produce the goods, the factors of production such as labour, land, capital , organiser, labour for wages, land for rent, capital for interest and organizer for profit will be exchanged.

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