A Circular Flow Diagram That Includes The Government Sector

1007 Words Jul 2nd, 2015 5 Pages
Microeconomics
A circular flow diagram that includes the government sector.
3 sector/3 market circular flow with the foreign sector added as well. .
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3 sectors: Household, Business and Government
3 markets: Product, Resource and Financial

The household sector is responsible for consumption expenditures. It includes everyone, all the people who seek to fulfill their wants and need. This is eating, shopping and the consumption of items. Don’t let the name fool you, you don’t have to own a house or even live in an apartment. The name “Household Sector” just simply means a person’s everyday wants and needs. The Business sector is our factory workers or worker ants as I like to call them. Made up of all different types of companies that leads its self-back to the Household sector to produce our everyday wants and needs. The sole purpose is the production of goods and services. Some business can be small or large and may be known as proprietorships, partnerships, or corporations. Some have companies/ factories all around the world, while others could be working from their homes. Production transforms anything into everyday wants and needs of the people. For example a pile of steel can be transformed into a car. Once the car is produced then it gets transported to a dealership somewhere in the world where a single person who desires it can buy it. The Government sector is like the boss in my opinion. It includes all levels of the government which…
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