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Flow of income
The flow of income in a god and services market has two players, the firms, and the household. The flow of money and goods in such a market flows a circuit that corresponds to the value of the goods. The exchange runs in opposite direction, as the firms obtain the money from the households, they get the finished products in return(Schofield and Troy 23). On the production side, the company spends money to obtain raw materials from the household.
In the resource markets, the circular flow of income expands to include financial markets, the government sector, and the international sector. In this flow, the household contains the consumers; the business sector has the producers, the resource markets in the flow offer direct services from the business sector to the households(Schofield and Troy 23). The foreign sector obtains the gods from the corporate sector in exchange for money. The government in this flow offers regulation to the sector.
The loanable funds market involves the financial institutions as the significant player in the market. The forces of demand and supply, the existing policies among other factors dictate the flow of income. The amount of national savings also determines the quantity of loanable funds. On the borrowers side is the firms and individual, firms ae the dominant borrowers(Schofield and Troy 23). The financial institutions gain from the interest paid by the borrowers. While firms benefit from the investment, they initiate with the money.
Foreign exchange involves imports and exports. Goods move from one country to another and money is obtained in return. Importers get the goods and give money in exchange to the exporters. Two factors that are dominant in this flow of money is production and consumption, represented by firms and households respectively.
Work cited
Schofield, Neil C, and Troy Bowler. Trading the Fixed Income, Inflation and Credit Markets: A Relative Value Guide. Chichester, West Sussex: Wiley, 2011. Internet resource.
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