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

3. Government’s Role 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.
monetary flow
physical flow
Circular Flow Diagram of a Mixed Economy
Households
Firms
Product market
taxes
government purchases
Government
expenditures
government-owned factors
taxes
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.