The Markets and Circular Flow

This type of market buys and sells goods and services

• Financial Market

• Labour Market

• Retail Market

• Overseas Market

An example of a retail market includes:

• The Australian Stock Exchange (ASX)

• Seek.com

• Westfield Chermside

• Banks

In the labour market

• Employees (Households) sell their skills/effort, Employers (businesses) pay wages/salaries

• Businesses (Employees) sell their skills, Employers (Household) buy goods and services.

• Businesses become the sellers and Households become the buyers

• Government sell their skills, Households buy their efforts

The following are examples of the retail market:

• Governments, Overseas, Financial

• Online shops, job search websites, ASX

• Online shopping, physical shops, market stalls

• Command, Mixed, Market

Who is involved in the financial markets?

• Banks

• Government

• Retail

• Oveseas

In a financial market

• Banks act as buyers when a borrower needs a loan

• Banks act as buyers when a saver (the seller) lends money to the bank

• Banks act as sellers when a saver lends money to the bank

What is bought and sold on the stock market?

• Money

• Goods and Services

• Shares in companies

• Labour

The circular flow model shows:

• Goods and Services bought and sold in the Economy

• Sectors of the Economy and how money circulates

• How Households buy items on the different markets

• The type of Economic System Australia is in

In the circular flow model, Households and Businesses rely on each other for:

• Labour for Income and Goods and Services for payment

• Savings and Investments

• Taxation and Government Spending

• Labour

What does the government sector do?

• Buys goods and services

• Households and firms rely on one another

• Turns savings from households into investment loans to businesses

• Taxes households and businesses, but also returns money to them through government spending