ECONOMICS FACTORS 1

ECOMONICS FACTORS
TERRY BENNINGFIELD
AMERICAN INTERCONTINTENTAL UNIVERSITY

ECONOMICS FACTORS 2
ABSTRACT
In this paper I am going to explain the ins and outs of a closed and an open system. Explain what leakage and injections

ECONOMICS FACTORS 3 In a circular flow, your money will enter a system then in turn will exit a system. The circular flow will help you understand how consumer’s money will travel through a complexes economic system with household, business, government and foreign agents. In closed and open systems, there are two kinds of consumers. One is the consumers because they purchase good and the other services and business that purchase production. Each group will enter different markets that they will enter different markets on their wants and their needs. In a consumers needs it will enter the market to produce their goods. While your business will enter a factor market with which t will buy products from sellers and or providers. In the exchange of monies enter the household and then from there will enter the firms that produce the goods and services. All businesses need factors of production for example; land would be needed to grow crops, labor to take care of the crops and capital is needed to deliver the products and services that businesses can offer to consumers or households. The money that households receive as income then intern buys the products and services from businesses. There they use the money to buy or rent the factors of the production from households. This means the money will flow in a circular motion. Here is an example; a student needs to buy a text book from the school he or she is attending, he or she will enter into the goods market by using the money that he or she earned. By buying textbooks, the publishing company,

ECONOMICS FACTORS 4 Will get its part, and goes to the factor market and they will have to have an editorial staff. Will also need to rent office spaces and warehousing or purchase paper and the materials to produce and deliver the product. Other than a closed system, there is an open system. In an open system, the economic counts the goods and services which are exchanged domestically and nationally. In several of the figure pictures in the word of wisdom book there are graphics that show the processes. You have leaks from the domestic households to foreign companies, from domestic businesses to foreign owned of factors f production and leaks from domestic and businesses to foreign governments through taxation. To put it in other words, an American imports (products made in another country that are sold in the United States) or the U.S. hires representives in India, many leakages are created. The leakages are the part of the country’s economic activities. With the leakages, they put money into the system. The money will come from the government and foreign households and firms. When the government enters the factor market to get domestic, labor, capital and all the other factors of production to have goods and services. The government enters the market to purchase automobiles, writing utensils and other products, from domestic firms. When you export products, the US sell their products is foreign countries. This is represented by the blue arrows in the figure in the book. This brings money into the U.S. economy because foreign firms and households buying products that are made in the U.S. using domestic labors, capital and others means of production.

ECONOMIC FACTORS 5
There is another leak that is not shown in the figure in the book and that is the money that the households save whether is a land or in stocks and bonds. In turn, the savings flow into the financial sector which lends money to other households and businesses. With this type of loan, households could buy expensive goods, such as, cars and houses, while the firms could use the loan to purchase things like machinery or buildings. When your money goes from households into a financial system it is called a leakage to your savings. Investments are considered when money is borrowed. In the interrelatedness of an economy, the circular flow diagram shows the interrelatedness of different agencies; households, businesses, governments, and foreign markets within the economy. For example; what if the government decreases taxes that households have to pay. This kind of move is considered a: interlinked consequence” for the rest of the economy. When there is a decrease in household taxes, it will increase disposable income; the amount of the one left after taxes are paid. If there are more disposable income households are likely to go to the goods market and purchase more goods. The more households buy goods, the more businesses will provide and make more of the products. Thus, in turn will get businesses to go to the factor markets and buy or rent, land, labor, capital, natural resources and raw materials. This cycle repeats itself, In other worked, in an interrelated economy, an act by the government of cutting taxes in one section has a cascading effect across the entire system, such as more consumption of production of goods and services.

ECONOMIC FACTORS 6
A personal leakage of mine would be telling a friend about something you are going to buy and in turn you friend goes and tells one person and that person tells another and so on until you buy the product and the also buy the product.
When my product was leaked out it was bought by so many people that it injected money into the businesses to where more products would have to be produced.

REFERENCES
THE WORDS OF WISDOM BOOK IN THE BOOK SHELF