I have chosen this photo of the Circular Flow Model because it represents what it is very well and it is easier to understand than many.

In the first video, Jason Welker talks in length about the what every group in the Circular Flow Model does for the other and what they get rewarded for. He also explains the goals of households and firms: Households want maximum utility, happiness, and consumption of goods and services while businesses want to maximize profits and sell goods and services to make more revenue than what spent on resources to develop/manufacture quality goods.

 

I have chosen this video for this wall because Jason Welker explains crucial details about the circular flow model (as I explained some of those details) in a professional matter. 

In this video, Jacob Clifford (the creator of the video) says similar things Jason Welker has written but he mentions some details that I never knew before until now. He explains that Businesses both supply and demand, they demand in the Resource Market and they supply the Product Markets. Clifford also gave an example (in the form of a question); a mall is both a Product Market and a Resource Market because people come to buy stuff from the product market side while people also work there for the resource market side so money is both being earned and spent.

 

This video has some very interesting details on the Circular Flow Model with questions that are useful for knowing the extra details of what the circular flow model is all about.

 

I chose article not just because it explains everything in detail but it also makes very good points that makes me sit and wonder “What if this happened in the economy?”

In this article, before the Circular Flow Model is fully explained, we have been given the terms and the roles of each groups. Households are the consumers and the those who get paid for land and labour. Firms are the producers and those who command if a product will be manufactured or distributed. Lastly the government plays an important role in the economy, since we live in a capitalist country does not intervene with manufacturing and trade but they will get in the way of the firm’s productivity unless they have product rights. 

 

This article also explains the Circular Flow Model in three different economies: Two, Three, and Four-Sector economies.

 

Two-Sector Economy: Households and firms have an additional role, they exchange revenue, income of resources, expenditure of Firms, revenue of Firms, and Consumption of expenditure with one another.

 

Three-Sector Economy: Households pay taxes to the Government Sector while the Government Sector buys services from households. Firm Sectors also pay taxes to the Government Sector and the Government Sector purchase their needed goods from those Firm Sectors. Firm Sectors send income payments to households and the Households will make purchases from the Firm Sectors. Households and the Government Sector send their savings to the Capital Market while the Capital Market invests in the Firms and the Government Sectors.

 

Four-Sector Economy: Everything I explained about the Three-Sector Economy complies with the Four-Sector Economy but there are some new rules. Firms and Households will send their payment for import to the Foreign Sector while the Foreign Sends Exports Transfer payments to Firms and sends Transfer payments to Households. So, unlike Two/Three-Sector, Four-Sector Economies have a “Foreign Sector” for import/export payments

 

I wanted to add this to the wall because I am happy that the creator of the article gave us some important details throughout the entire thing! I didn’t even know there were different sectors of Economies

This article gives a detailed explanation of how the circular flow model works. It shows how the model works in both directions. Both money flowing from the household to business by buying goods, and from the business to the household by providing labour to the business to produce goods. It also shows what isn’t included in the circular flow model that also impact the economy, like foreign imports and exports and how they leak goods into and out of the economy.

I chose this article because it gives a simple and easy to understand of the circular flow model, and shows each side of the model relies on the other.

This article focuses on the use of the circular flow model more on the personal level, showing the impacts income and spending have on the economy. You get income from working at a business, which gives you wealth to spend on goods from businesses, continuing the cycle.. It also shows the leakages from the circular flow, such as savings, taxation and imports. As well as injections into the circular flow model like investments, government expenditure and exports.  Also, it introduces the government’s role in a circular flow model, showing how both the household businesses pay taxes to the government, which provides social benefits and loans to start new businesses.

I chose this article because it shows the circular flow model on a more personal level, showing how it relates to your personal spending and income, as well as the impact saving money for future use has. It also provides very detailed and informative graphics which make understanding the complexities of the circular flow model easy to understand.

This video provides a very basic, and simple understanding of the circular flow model thats easy to follow and understand. It does this by breaking the circular flow model of the free market into four stages, household, product market, firms/businesses, and the factor market. It also focuses more on the relationship between each stage of the model, rather than each step as being different.

I chose this video because I think it would be a great example to show someone the circular flow  model for the first time. I think it would be good at this because it shows the relationship between each stage of the model, how each direction relies on the other without getting too in detail and stays under five minutes long.

This video demonstrates how the circular flow model would work with a single individual, and how it would expand with a larger population. It also breaks down every step of the circular flow model, showing were the firm gets its income and where its expenditure goes, and the same for the household, and how it all balances out. The video also explains the circular flow model ties in with calculating the Gross Domestic Product, by using both expenditure and income from the circular flow model.

I chose this video because it provides a much more in depth look at the circular flow model, and breaks down every stage to an easy to understand level.

This diagram gives a clear understanding of how the circular flow model works with the wealth flowing through household, government and firms, and how the model remains a cycle. It shows the different stages, and their relationship with the other stages. It simply shows how the household supports firms by purchasing goods, and the firms pay the household for labor, but also how both the household and firms pay taxes to the government which then redistributes the wealth into social benefits and government loans.

I chose this picture because its a very clear diagram of how the circular flow model works, and how each stage interacts with each other.