ECON 225 ECONOMIC DEVELOPMENT 

PRELIM

Name: RUTH MAE BUMANGLAG Schedule: MW 1:30-3:00PM Date:

Exercise no. 1
For 30 points 

Figure 1

1. Understand the circular flow of economic activity shown in Figure1. 

Figure 1 depicts the circular flow of economic activity in which
households acquired products or services from businesses via the
product market. Then there is spending on the household side, and
income is entered into the firm.
2. Then create your own economic model showing the circular flow of a simpler
economy, such as your parents' income. How does their income come in and
how is it divided and delivered to other segments of the economy around you?

HOUSEHOLD
FACTOR OF PRODUCTION

INCOME INCOME
GOODS & SERVICES

FIRMS