The Circular Flow Model of Market Economy

A presentation by: Jake Weatherred

Three Parts of Circular Flow ModelFactors of Production- ex: land, labor, capital, and

entrepreneurshipConsumers- ex: you and meProducers- ex: business

• All three of these factors are important equally important components of the Circular Flow Model, consumers use factors of production to make enough capital (money) to by goods (ex: food) and or services (ex: plumbing) from producers. Who in turn are consumers themselves and the money is reciprocated through the system

• A more comprehensive description of the circular flow model would be expected of students, but I have not the time, neither am I proficient enough with the Circular Flow model to provide this.

Factors of ProductionThese are ways or manners in which people

raise capital in order to have enough to money to reinvest back into the circular flow model by paying money to producers for goods and service. Also money is spent to maintain factors of production (ex: upkeddp of facilities, payment of employees, bills).

Once again I apologize for the lack of information, students would be expected to provide much more in depth information in their own presentations.

ConsumersThese are represented by people, in essence

every person who has any money is a consumer, and after receiving money from factors of production (employment), consumers reciprocate the cycle by spending their own dispensable income on goods and services.

Once again I apologize for the lack of information, students would be expected to provide much more in depth information in their own presentations.

ProducersThese people are also consumers in their own

rights, but production is their form of employment, once they receive money from other consumers in return for their goods and services producers reciprocate the model by spending their own dispensable income on goods and services for themselves.

Once again I apologize for the lack of information, students would be expected to provide much more in depth information in their own presentations.

Circular flow of income video

In this section students would show a portion of this video to illustrate their points

Circular, reciprocal nation of the modelIt is important to not that all actors are

important in the model and without one of the three parts the model would fall apart. Each facet of the model depends on the other