The Interaction among the Private and Public Sectors of the Economy

1. The Interaction among the Private and Public Sectors of the Economy Group 3 Hoi Wan Chan Jamie Desappio Lynean Graham Katarzyna Grabowska Marina Ristic Yi Shao

2. Question 5 • How do the private sectors-households, business, and the international sector-interact in the economy?

3. Financial Intermediaries Saving Investment Payment for Goods and Services Households Firm (Business Sector) Goods and Services Resources Services Payments for Resource Services

4. The Household Sector • Selling their resource services to business in exchange for money payments. • Spending their income for goods and services produced by the firms. • Place the balance in savings vehicles via financial intermediaries.

5. The Business Sector (Firms) • Employing the services of resources in order to produce goods and services. • Pay households for their resource services. • Borrowing money from financial intermediaries expansion of their productive capacity.

6. Households and business interact with each other by means of buying and selling.

7. Financial Intermediaries Saving Investment Payment for Goods and Services Households Firm (Business Sector) Goods and Services Resources Services Payments for Resource Services Foreign Countries (International Sector) Exports Imports Net Exports Payments for Net Exports

8. The International Sector(Foreign Countries) • Firms import goods and services from foreign countries and sell these goods and services to household. • Firms pay for goods and services from foreign countries. • Firms export goods and services to foreign countries.

9. Question 6 • How does the government interact with the other sectors of the economy?

10. Financial Intermediaries Investment Saving Payment for Goods and Services Goods and Services Taxes Taxes Households Government (Public Sector) Firm (Business Sector) Govt Svcs Govt Svcs Resource Svcs Goods & Svcs Payment for Resource Svcs Payment for Goods & Svcs Resources Services Payments for Resource Services Foreign Countries (International Sector) Exports Imports Net Exports Payments for Net Exports

11. The Public Sector(The Government) • Households sell resources to the government in return for income • Business firms sell the goods and services the produce to the government for revenue • Taxes are the income the government receives from households and firms

12. Bank of America $130 $130 $50 MP3 Players, laptops Programmers Taxes $20 U.S. Government Taxes $50 Dell Financial Aid Charter Labor Computer Rental $200 $100 Labor Wages $100 China Exports Imports Net Exports $250

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