Circular Flow of a Mixed Economy

1. Circular Flow of a Mixed Economy Have Notebooks Out Test on Next Friday

3. Circular Flow Diagram of a Mixed Economy monetary flow physical flow taxes government purchases Government expenditures expenditures Firms Households government-owned factors taxes physical flow monetary flow Government’s Role in a Mixed Economy In a mixed economy, • The government purchases land, labor, and capital from households in the factor market, and • Purchases goods and services in the product market. Product market Factor market

4. Questions • 1. Give an example of a productive resource that households sell to government. • 2. Give an example of a good or service that businesses sell to government. • 3. Give an example of a good or service that government provides to households in exchange for money payments, mainly taxes. • 4. Give an example of a good or service that government provides to businesses in exchange for money payments.

6. Transactions 1.Ted sold the trees on 500 acres of land he owned to a lumber company that cut them down to make lumber.

7. 2. Maria received a $200 interest payment from a business to which she had lent money.

8. 3.The Amalgamated Shoe Company sent 5,000 pairs of shoes to a major discount store.

9. 4.Terry paid $75 for a new jacket.

10. 5. A business paid Amy $4,000 a month to use a building she owns.

11. 6.Jane received a paycheck for $675.80 from her employer.

12. 7. The Ajax Cleaning Company came to Frank’s house and cleaned his carpet.

13. 8. Larry earned $35,000 last year from the restaurant he owns.

14. 9. Jason bought a new battery for his car.

15. 10. Sara paid the bill for her charge card at a department store.