1. The Circular Flow of the Economy: Copy the chart below onto your paper, then place the terms on the next slide in the appropriate place.

2. Circular Flow Terms Product Markets Factor Markets Households (Consumers) Firms/Businesses (Producers) Goods & Services Factors of Production Income Profit Payments Spending

3. ,

4. Product Markets Factor Markets Businesses/ Firms/ Producers Individuals/ Consumers/ Households Goods and services Factors of Production $ Consumer Spending $ Payments for factors $ Profit (gross and net) $ Income from Sale of factors (gross and net) Land, labor, capital, entrepreneurship

5. 1-5 are examples of transactions on the circular flow of the economy. For each example indicate in which quadrant/action of the CFE the transaction occurs. (Use your notes for help) 1.David buys a CD at the local store for $9.99. 2.Emily earns $6.50 per hour entering data at the music conservatory. 3.Jagdish receives $15,000 in profits from his half- ownership of a coffee shop. 4.Keisha makes decorative pillows that she sells for $30.00. 5.Mammoth Toys Inc. hires 100 new employees.