The Economic and Business Environment: Overview and Circular Flow Model

Vocabulary flashcards covering the fundamentals of an economy, the global economic impact of geopolitical events, and the components of the five sector circular flow model.

Economy

The system of producing, buying, and selling goods and services.

Global economy (World economy)

. Countries are connected through international trade, investment and global businesses creating the global economy

2026 Iran and US war

A conflict that impacted the global economy by raising oil prices and transport costs, increasing uncertainty that slowed investment, and causing higher fuel prices and in

Five sector circular flow model

A diagram that shows how goods, services, and money move around the economy, illustrating how different sectors are interconnected through spending and income.

Consumers / Households

The economic sector that gives labour to businesses, receives wages, and spends money on goods and services.

Businesses / Firms

The economic sector that produces goods and services, pays wages, sells products to consumers, and employs workers.

The Government

The economic sector that collects taxes from businesses and consumers, spends on public services, and protects the country through law and police.

Banks / Financial institutions

The sector that manages savings and provides loans to individuals and businesses to help them expand.

Overseas sector / Foreign sector

The sector involved in trading with other countries through importing and exporting.

Import

The act of buying goods and services from other countries.

Export

The act of selling goods and services to other countries.