1. Resource or Factor Market Markets that exchange the services of the four factors of production--labor, capital, land, and entrepreneurship. The buyer of factor services is business sector. The seller of these services is the household sector. The study of macroeconomics is concerned with imbalances in the resource markets, especially surpluses and the resulting unemployment of resources. The resource markets, also termed factor markets, are one of three primary sets of macroeconomic markets. The other two are product markets and financial markets.

2. Product Market A market used to exchange a final good or service. Product markets exchange consumer goods purchased by the household sector, capital investment goods purchased by the business sector, and goods purchased by government and foreign sectors. A product market, however, does NOT include the exchange of raw materials, scarce resources, factors of production, or any type of intermediate goods. The total value of goods exchanged in product markets each year is measured by gross domestic product. The demand side of product markets includes consumption expenditures, investment expenditures, government purchases, and net exports. The supply side of product markets is production of the business sector.

4. House Hold v. Firms Firms are the primary producing units in a market economy. Each firm started out as the dream of one or a few individuals. People who are responsible for taking new ideas or new products and turning those ideas into successful businesses are known as entrepreneurs. Entrepreneurs are also often responsible for organizing, managing, and assuming the risks of a firm. Households can range from individuals living alone and single- parent families to college friends sharing a house, as well as extended families living together. Households are described in the text as the primary consuming units in an economy. While such a description does not capture the richness of what households can be, it does describe one of their primary roles in the economy.

5. Free Market Flow Chart

6. Mixed Economy Flow Chart