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PLAGIARISM SCAN REPORT

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2022-02-10

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Content Checked For Plagiarism Written Assignment Unit 1 BUS 1104 1/31/2022

Introduction The circular flow model is a financial model that illustrates the flow of economic resources, goods and services, and money through the economy. The circular flow model shows the interaction between two sets of economic decision-makers— households and businesses—and two types of economic markets—the market for resources and goods and services. (Federal Reserve Bank of St. Louis, 2021) According to the video, the circular flow of St. Lois Federal Reserve, the flow of money from households and vice versa can be seen; this is where households sell their resources, e.g., land, capital, labor, and entrepreneurial ability to businesses. Meanwhile, after that, the businesses will pivot those resources obtained into goods and services, sold again. This is done between the product and resource markets, as seen in Figure 1 below.

Figure 1.

Circular Flow diagram in a simple economic model (Mr. Medico. n.d.) When someone from a household buys fries from a diner, the money received for those fries will flow from the household to the business, the diner in this scenario. Subsequent to this, the business will use the money to buy the necessary goods from a supplier (business), such as potatoes, cooking oil, seasonings, etc. This is also done to households, whereby the money earned is used to pay the salaries of staff, then the business will buy resources from households such as labor, land, capital, entrepreneurial ability, and the flow continues. Daily, everyone needs transportation to get from one location to another, especially when commuting to work. Possessing a vehicle is very necessary for many individuals, and I will be using an example of that in this assignment. If someone wants to buy a car to satisfy the needs for private transportation, that individual in the household will spend his/her money earned from labor traded to businesses in return for cash. The vehicle that is classified as the good that was sold by a business will eventually generate money and profits that will be used to pay its employees and invest in research and development. This will introduce a new model to be sold as a new

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stock which means more money can be generated due to additional goods. After driving the car for 12,000 miles, the individual would need to send his/her car to an auto repair shop to be serviced, which is where he/she will spend the money earned to pay for services rendered from the auto repair shop. This means that more money will flow into that auto repair shop. The money made as a profit after taking out the cost of the good sold, which included wages, taxes, rent (if any), another operational cost, cost of the car itself, then will be used to buy a new piece of land from a household to build another car dealership as a plan for business expansion, then the cycle continues to flow again. Conclusion The process mentioned above can be summarized as: Consumer spending —> Revenue —> Cost —> Income Word count: 537 words

References Note, Circular Flow Model. No Bull Economic Lessons, Macroeconomics & Microeconomics Concepts You Must Know. Mr. Medico. n.d., https://www.mrmedico.info/macrocircularflow.htm Federal Reserve Bank of St. Louis (2021), Circular Flow - The Economic Lowdown Video Series, Retrieved from https://www.stlouisfed.org/education/economic-lowdown-video-series/episode-6-circular-flow

Matched Source Similarity 5% Title:Understanding the Circular Flow Model in Economics https://www.masterclass.com/articles/understanding-the-circular-flow-model-in-economics

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