The Circular Flow of the Economy 1© 2011, 2005 P. LeBel
Imported Inputs and
Semi-Finished Goods Physical Inputs Factor Physical Inputs Markets
Factor Purchases Factor Income
Taxes and Taxes and Borrowing Borrowing
Firms Expenditures Government Expenditures Households
Government Taxes Government Savingsand Borrowing and Repayments
Firm Income Product Household Purchases Goods and Services Markets Goods and Services
Savings and Savings and Repayments Repayments
Financial Intermediaries Loans and Loans and Withdrawals Withdrawals
Goods & Services Exports Purchases of Finished ImportsExport & Foreign Investment Income Imported Goods & Services
InternationalTransactions
The Structure of Factor Markets
Inputs in Production Functions Factor Market Paymentsand Technology:
Land - N Rent -R
Labor - L Wages - W
Capital - K Interest - I
Entrepreneurship - E Profit - Pr
The Structure of Factor Markets
Inputs in Production Functions Factor Market Paymentsand Technology:
Land - N Rent -R
Labor - L Wages - W
Capital - K Interest - I
Entrepreneurship - E Profit - Pr