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Circular Flow Of Income Model - School Essays

Circular Flow Of Income Model

The demonstrates the important relationships between sectors in the Australian economy. It can also be useful for understanding and explaining current conditions of these sections. It is a useful tool in evaluating the government budget and areas of spending to keep the economy stable.
The is made up of five sectors. These include the
household, firms, finance, government, and external sectors. Each of these sectors has a vital and realistic role to play. The household secotr comprises of basic consuming units in society, but it is also the source of supply of the specialised labour force which is required by the firms sector. The business sector comprises of basic productive units in ...

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and flood mitagation programs.The final sector of the circular flow model is the foreign sector. The foreign sector represents another set of leakages and injections in the circular flow and, therefore, another opportunity for loss of equilibrium.
The current state of the household sector is in a slight slump. The household sector is reluctant to buy goods at the cirrent point in time. The income they are recieving is lower than what it has been, which would explain the drop in consumption. There has also been a noticable drop in the amount the sector has been saving. I have based my annalysis for this sector on comments from The Economic Rag stating "National savings levels dropping slightly, possible as a result of the reduction of income levels", and "the recent drop in production levels for both export and domesticaly consumed items". These statements imply that there has been less demand for products by stating that there is a recent drop in production levels.
The business or ...

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PAPER DETAILS

Added: 11/5/2005 06:45:24 PM
Category: Miscellaneous
Type: Free Paper
Words: 867
Pages: 4

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