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economics

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Issue:

Miscellaneous

 

Written by:

Joseph R

 

Date added:

February 2, 2013

 

Level:

University

 

Grade:

A

 

No of pages / words:

8 / 2048

 

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561 times

 

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To start with we will ignore the impact of government policy and overseas sectors. Households ultimately own the factors of production, e.g., labour, materials and capital, and supply these factors to firms who use them to produce goods and services. In return households earn rewards for supplying the firms with the factors of production e...
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In return households earn rewards for supplying the firms with the factors of production e.g., wages and interest on capital. These rewards are in turn used to buy the goods that the firms have produced. This process is known as a circular flow- see Figure 1. Figure 1: Simple circular flow From Figure 1 we can see that there are three ways of measuring the amount of economic activity in the economy...
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