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Circular Flow of a Mixed Economy
Circular Flow of a Mixed Economy
Have Notebooks Out
Test on Next Friday
Chapter 2 Section Main Menu
monetary flow
physical flow
monetary flow
physical flow
Circular Flow Diagram of a Mixed Economy
Households Firms
Product market
Factor market
Government expendituresexpenditures
governm
ent-
owned facto
rstaxes
taxesgovern
ment
purchases
Government’s Role in a Mixed EconomyIn a mixed economy,
• The government purchases land, labor, and capital from households in the factor market, and
• Purchases goods and services in the product market.
Chapter 2 Section Main Menu
Questions• 1. Give an example of a productive resource that households sell
to government.
• 2. Give an example of a good or service that businesses sell to government.
• 3. Give an example of a good or service that government provides to households in exchange for money payments, mainly taxes.
• 4. Give an example of a good or service that government provides to businesses in exchange for money payments.
Chapter 2 Section Main Menu
Chapter 2 Section Main Menu
Transactions
• 1.Ted sold the trees on 500 acres of land he owned to a lumber company that cut them down to make lumber.
Chapter 2 Section Main Menu
• 2. Maria received a $200 interest payment from a business to which she had lent money.
Chapter 2 Section Main Menu
• 3.The Amalgamated Shoe Company sent 5,000 pairs of shoes to a major discount store.
Chapter 2 Section Main Menu
• 4.Terry paid $75 for a new jacket.
Chapter 2 Section Main Menu
• 5. A business paid Amy $4,000 a month to use a building she owns.
Chapter 2 Section Main Menu
• 6.Jane received a paycheck for $675.80 from her employer.
Chapter 2 Section Main Menu
• 7. The Ajax Cleaning Company came to Frank’s house and cleaned his carpet.
Chapter 2 Section Main Menu
•8. Larry earned $35,000 last year from the restaurant he owns.
Chapter 2 Section Main Menu
• 9. Jason bought a new battery for his car.
Chapter 2 Section Main Menu
• 10. Sara paid the bill for her charge card at a department store.