Circular Flow of “Econoland”

Understand and analyze the circular flow model and it’s components

ES: C-4 and IR-7

Procedure:“What Goes Around Comes Around”

15 minutes to engage in the simulation

Households: Sell your factors of production to firms/Buy “ECONOS”

Firms: Buy factors of production from households/Sell “ECONOS”

Read instructions on handout “Activity 10.1”

Goal:

Households: Acquire as many “ECONOS” as possible

Firms: Acquire as much money as possible

Winners from each group will receive an extra credit point on Test #1

ECONO-FACTORY

Conclusion:

How do individuals and families in households depend on people in businesses?

How do businesses depend on individuals and families in households?

What is the role of government in the circular flow of economic activity?

Summary:

The value of output equals value of income generated

Output and input are linked

Output and employment are linked