1. Economic Activity 19.2

2. Market
A free and willing exchange of goods and services

3. Factor Market
market where productive resources (factors of production) are bought and sold

4. Product Market
Market where producers offer goods and services for sale

5. Circular Flow Trade: goods and services and resources Foreign Sector
Sells: Goods and services they have produced
Product Market
Purchases: capital goods for their business
Purchases: goods and services with wages
Provides: goods and services
Schools, libraries, etc.
Purchases: goods and services
Business Sector
Government Sector
Consumer Sector
Uses: labor and collects taxes
Provide: Labor in exchange for wages
Uses/Purchases: Pay wages for labor, $ for resources
Factor Market

6. What are the Four Sectors of the Market?
Consumer Sector (purchase 60-70% of output)
Business Sector (purchase 15-20% of output)
Government Sector (purchase 20% of output)
Foreign Sector (purchase 4% of output)

7. Economic Growth
Growth occurs when a nations output of good and services (production) INCREASES.
The Market Grows and standard of living rises. This is the goal!

8. Ways we try to help Economic Growth by increasing production

9. Productivity Efficient or best use of resources
Everyone benefits when scarce resources are used efficiently
The higher the productivity the more you can produce which helps you grow

10. Specialization Focus on what you are good at
People will have to depend on others to produce other goods and services
This helps improve productivity!

11. Division of Labor
Break jobs down into smaller tasks for different people
This also improves productivity! So you can produce more FASTER!

12. Human Capital The sum of people’s skills, ability, and motivation.
Businesses need people with the skill and DRIVE to complete tasks quickly and of high quality so they can increase production and GROW! or

13. Economic Interdependence
Relying on others to provide goods and services
Gained productivity but a loss of self-sufficiency.
You count on others to produce what you don’t. What if they don’t?