Well, a couple weeks ago we learned about the circular flow model. The circular flow model contains the terms of income or "circular flow" to a simple economic model which describes the reciprocal circulation of income between producers and consumers. This week, we included the government with the circular flow model! It expands the circular flow model by illustrating how taxes are used in the system. It shows the government interacting with the households and businesses collecting taxes then giving back back to each. The product market gives the government products, in return for money. Also, the factor market also gives the government factors in exchange for money. I think it is very helpful that we learned the involvement of the government within the households, businesses, and factor & product markets. If we live in America, we should know the involvement of government in society and that is exactly what Mrs. Weser taught us!!!
I really like that you put the circular flow model in your post. It helps to expand on the idea of the government's involvement in the economy. The significance of taxes in this type of economy cannot be stated enough. I appreciated becoming more aware of the system too. The interactions between the government, households, and businesses may seem complex on the surface, but underneath it is the simple model we learned.
ReplyDeleteI like your comment about how citizens should know the government's involvement. I never knew what the government really did in the economy, and I am glad that I now understand. In order to make informed decisions as far as voting goes, we need to know the ins and outs of our government and its involvement in our everyday lives!
ReplyDelete