The Five Sector Circular Flow Of Income Submit A Diagram Of The Five Sector Circular Flow Of Income With Your Essay

755 words - 3 pages

Five Sector Circular Flow of IncomeThe five sector circular flow of income shows the distribution of income within the economy. It has five main subsidiaries or contributors, including individuals, businesses, financial institutions, the government and international trade and financial flow. Each of these sectors contribute to either the leakages or injections (or both) of the circular flow of income.Individuals, refers to all members of the economy, regardless of employment or financial status. They are concerned with the activities of earning an income and spending on goods and services. They are consumers, as well as the owners of productive resources. This means individuals supply factors of production such as labour and enterprise, and for this they are rewarded by businesses with wages, rent, royalties and other forms of income. This income is then spent on locally manufactured goods and services, imports, taxes and savings.The business sector includes all business firms involved in the production of goods and services. It does not include financial services. Businesses deal with all activities involved in buying factors of production and using them to produce goods and services. They depend on individuals for both the supply of resources needed for production and the consumption of goods and services produced. Individuals require businesses to provide goods and services and income. This interdependence is essential to the circular flow of income. Businesses form the private sector of our economy.The financial institutions sect relates to all institutions involved in borrowing and lending money. They are the median between borrowers and lenders of money. Some financial institutions include banks, building societies, life insurance companies and Superannuation. They are needed by establishments and firms to undertake savings and investment. Financial Intermediariefs accept deposits or savings from individuals and lend to businesses for investment purposes, thereby mobilising savings. This is also known as the capital market.Savings are considered to be leakages in the circular flow of income, as money is put aside and therefore withdrawn from the economy. When individuals save, it upsets the equilibrium, as reduced expenditure on their behalf causes a fall in production which means less workers are needed, so there is a rise in unemployment and income levels also fall. This downward spiral would eventually lead to the...

Find Another Essay On The five sector circular flow of income submit a diagram of the five sector circular flow of income with your essay

Mini essay: CIRCULAR FLOW MODEL "Explain the circular flow model. What assumptions is it based upon? How is equilibrium determined in the model? Explain its application in the real world."

1236 words - 5 pages The circular flow of income model is a theoretical representation of the economy. It shows the distribution of income within the economy and the interaction between the different sectors in a modern market economy. The five-sector model is a more elaborate model in comparison to the basic, two, three and four sector models. The model represents an economy like Australia and divides the economy into five main sectors.The first sector in the model

Balance Sheet and Income Statement Analysis of Five Publicly Trade Companies

3384 words - 14 pages Balance Sheet and Income Statement PAGE 1 Balance Sheet and Income Statement Analysis of Five Publicly Trade CompaniesUniversity of PhoenixBalance Sheet and Income Statement Analysis of Five Publicly Trade CompaniesThe main objective of financial statements is to provide useful information to external decision makers. The balance sheet together with the income statement and cash flow statement, make up the cornerstone of any company's

An Analysis of The Circular Ruins

1372 words - 5 pages An Analysis of The Circular Ruins      "The Circular Ruins" is a short story written by Jorge Luis Borges in 1964. Borges was born in 1899 and died in 1986. At the age of six, he knew he wanted to be a writer. By age eight, he had already written his first story. Most of Borges' stories are listed under the fantastic literature category. Fantastic literature has several things in common with magical realism, but it is less believable

Managing the flow of information

1096 words - 4 pages a wrong assumption.There are contributing factors that influence effective communication. First, we are all different, and perceive communication through personal filters that are affected by diversity, knowledge, experiences, and biases. Next, both the sender and receiver must take responsibility for understanding communication. Finally, we need to take time to develop and perfect communication skills.Communication In observing the flow of

Five Ways to Develop Your Managerial Style

2049 words - 8 pages interrupted between the hours of nine and noon, tell your employees! Post it on the door as hours of availability. Put it in a memo or a newsletter. Remember that it is up to you to inform others. Most people will adhere to and respect your wishes, if you will just be honest with them. It is when an employee is humiliated with a reprimand because he interrupted you at 10:00 a.m., that angers flare and hostilities arise. Especially when the boss in the

Circular Adventures Of Alice

642 words - 3 pages it's normal. The circle also relates with the geographic unusualness of Wonderland which we learn by the Cheshire Cat's explanations to Alice. No matter which way Alice chooses, she arrives at the same place, just like a circular path.A final aspect of circles to mention in Wonderland is that, the characters are confused about the ends and beginnings and live within a circle. There is no notion of regular destinations for them. The best examples of

The Five Love Languages: How to Express Heartfelt Commitment to Your Mate

1233 words - 5 pages direction on your perceptions of love and not be reluctant. Without direction, your spouse may not be aware of what they need to do in order to help you feel secure in your relationship with one another.One must keep in mind that there are clearly many reasons as to why a relationship is failing. These five love languages are not always the answer. However, they are the answer to a lot of situations. As long as this book isn't taken too seriously and

The tyranny of `other income`

944 words - 4 pages of the company's future worth.The reality, however, is that the volatility of other income (or, more specifically, forex gain/loss) has very little to do with the actual worth of the company.From a bottom line perspective, a business revenue of, say, Rs 1,563 crore plus other income of Rs 17 crore is exactly the same as business revenue of Rs 1,600 crore plus other income of minus Rs 20 crore!(Of course, this point does not hold true for banks

Use Michael Porter's five forces model to analyse the business environment in which your organization operates: Victor Chids

1691 words - 7 pages IntroductionAll organizations have got a set of forces and conditions outside their own boundaries that have the potential to affect the way the organization works. MoreMoney Banking Corporation Limited is no exception to this as it has got forces that it has to operate within. Michael Porter came up with the Five Forces Model commonly known as Porters' Five Forces Model which is used for analyzing an industry by looking at five forces believed

Media Control and the Flow of Information.

1269 words - 5 pages steer media attention from news or information that could be used against their employers. Recently, a good example could be the search for "weapons of mass destruction" within Iraq, once the American government went to war with Iraq in April they have not found any substantiating evidence that Iraq had any such weapons left. Now the CIA has decided to conduct a thorough investigation of the intelligence that they had earlier presented in their

The Flow of Communication in Criminal Justice

728 words - 3 pages make its way up to the Chief of Police.When an officer is giving instruction on a job and explaining the tasks involved with it, they will be higher up and needing to explain what each person should do. In this case the flow would go downward from a superior to a rookie. This instruction may also come horizontally when one officer will understand a procedure better than another officer who is on the same level as him or her and would explain that

Similar Essays

Market Equilibrium: The Circular Flow Of Income

594 words - 3 pages size. The equilibrium level of income refers to the level of income, output and employment at which the aggregate demand and the aggregate supply in an economy are equal. Market equilibrium occurs where quantity demanded is equal to quantity supplied, the market clears and there is no tendency in change. In reference to the five sector circular flow of income model, market equilibrium is achieved when injections is identical to leakages that

What Are The Main Features Of The Five Sector Circular Flow Model? How Is Equilibrium Achieved And What Implications Does This Have For Policy Makers?

970 words - 4 pages country generating income for Australian businesses. Exports are therefore a form of injection of income into the circular flow without using Australian resources to produce them. With both imports and exports taking place as the new addition to the five-sector economy the circular flow is again complete. All income is consumed, saved, taxed and now can be used to purchase imports.The economy is in equilibrium when income equals output equals

The Circular Flow Of Income And The Affect Of Leakages And Injections On Commercial Activity In Our Economy

682 words - 3 pages Untitled The Circular Flow of Income and �The affect of Leakages and Injections on Commercial activity in our Economy� In economics the Circular flow of income refers to the simple economic model which describes the circulation of money and good and services between producers and consumers in our economy. There are five main sectors that make up the model including: households, firms, financial Sector, government sector and

The Circular Flow Model Accompanied By Reverse Flows

1180 words - 5 pages steadily narrowed since the end of World War 2. The excelled technology explains the gradual development of a " two - tie labor market" in which those at the bottom lack the education and professional / technical skills of those at the top and, fail to get pay raises, health insurance coverage, and other benefits. The circular flow - The continuous movement of production, income, and resources between producers and consumers. This flow moves