Circular flow diagram with three sectors: households, business firms, financial markets, and the government

Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter13: Measuring The Economy's Performance
Section: Chapter Questions
Problem 4AA
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Circular flow diagram with three sectors: households, business firms, financial markets, and the government

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Step 1: Define house hold sector

It can be defined as a term that represents individuals or families who supply factors of production which encompasses labor, land, and capital to the different kinds of businesses in the economy and receive income in return for the work in those businesses. The income that an individual gets includes wages, rent, and interest.

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