Title

(2) The Simple Circular Flow Model

Topic Category

Circular Flow

Publication Date

2011

Keywords

Circular Flow, Households, Firms, Output Market, Goods Market, Input Market, Factor Market

Abstract

This takes a closer look at the simple circular flow model. It serves as a general overview of how the economy might operate. The dual nature of both the flows and the types of interactions is emphasized. This leads to a discussion of the role of output and input markets in an economy. How the circular flow model fits into micro and macro economic analysis is also explained.

Run Time

9:16

Primary Discipline

Economics

Skills Delivered

Ability to explain the roles of households and firms in a market economy. Ability to distinguish real vs. financial flows and input vs. output markets. Ability to explain the role of markets in coordinating the interactions between households and firms.

Rigor Level

2000

Prerequisites

Core Economic Actors Video

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