1. Macroeconomics Week 4

2. CIRCULAR FLOW DIAGRAM is a visual model of the economy that shows how money flows through markets among households and firms.

4. Labor (labor)

5. Capital (interest) ; and

8. HOUSEHOLDS are resource owners (land, labor, capital, entrepreneurship)

11. Concept of Value Added: For each stage in the production process adds to the value of the final product.

13. 9 of 46 5-SECTOR CIRCULAR FLOW EXPORTS (X) GOVERNMENT SPENDING (G) INVESTMENT (I) BANKS GOVERNMENT REST OF THE WORLD SAVINGS (S) TAXES (T) IMPORTS (M) INFLOWS: Investment (I), Government Spending (G), and Exports (X) S + T + M = I + G + X or OUTFLOWS = INFLOWS OUTFLOWS: Savings (S), Taxes (T), and Imports (M)