Circular Flow Map of Economic Acivity

National income and Product Accounts/National Account

Keep track of the flows of money among different sectors

product Markets

where goods and services are bought and sold

consumer spending

Household spending on goods and services

Factor Market

Market in which firms purchase the factors of production from households

Government Spending

spending by all levels of government on final good and services

Taxes

Required payments to a government

Tax revenue

is the total amount of funds the government receives from taxes

Disposable Income

Income remaining for a person to spend or save after all taxes have been paid

government Transfers

Payments that the government makes to individuals without expecting a good or service in return

Private Savings

Disposable income that is not spent on consumption

Financial Markets

Financial institutions through which savers can provide funds to borrowers

Government Borrowing

amount of funds borrowed by the government in the financial markets

inventories

stocks Goods and raw materials held to faciliate business operations