GRADE LEVEL: SHS 11/12 WEEK: 10

SUBJECT: UNDERSTANDING CULTURE, SOCIETY AND POLITICS LESSON: 1

TOPIC: ECONOMIC INSTITUTIONS

OBJECTIVES:
1. Recognize other forms of economic transaction such as sharing, gift exchange and redistribution in his/her own
society;
2. Analyze economic organizations and its impact on the lives of people in the society;
3. Label the diagram of circular flow model.
LESSON PROPER
LESSON 1: ECONOMIC INSTITUTIONS
CIRCULAR FLOW MODEL
 A depiction of how money and products are exchanged within an economy. A circular flow diagram might be
used by a business to show how a specific series of exchanges of goods, services and payments make up the
building blocks of a given economic system of interest.
Expenditures on goods and services
Rent, Wages, Internet and profit HOUSEHOLDS

Goods and services

Land labor, capital and
bought
entrepreneurship services
supplied
FACTORS GOOD
MARKETS MARKETS
Land labor, capital and
entrepreneurship services Goods and services
hired bought

Rent, Wages, Internet and profit FIRMS

Expenditures on goods and services
EXPLANATION
 The thin arrow are the services of factors of production that go from households through factor markets to firms
and the goods and services that go from firms through good markets to household. These flows are REAL FLOW.
The thick arrow is the income earned by the factors of production, and the expenditures on the goods and
services. These flows are MONEY flows. The choice that generate these real and money flows determine WHAT,
HOW and FOR WHOM goods and services are produced.
RECIPROCITY
 Is a chain receiving, pain and repaying of goods and services. In cultural anthropology, reciprocity refers to the
non-market exchange of goods or labor ranging from direct barter (immediate exchange) to forms of gift
exchange where a return is eventually expected (delayed exchange) as in the exchange of birthday gifts. Julian
Culp/Heiner Schumacher (2011), the amount sent by the first mover depicts a measure of “trust” and the
amount returned by the second mover is the measure of “trustworthiness” or “reciprocity”.
TRANSFERS
 Is the distribution of income and resources in the market system. Transfer payments, are payments that are
made without any good or services being received in return (Bishop, 2012
REDISTRIBUTION
 Refers to a system of economic exchange involving the centralized collection of goods from members of a group
 It is the act the government to distribute income from the wealthy businesses and citizens to the less wealthy
(Mares 2014).
MARKET TRANSACTION
 Where buyers and sellers transact economic good and services
 Buyers and sellers interact with one another to exchange goods for an amount of money (Arcinas & Mactal
2016).Loans are money advanced to a business with an interest charge that must be paid and returned at some
poin in the future (Peavler, n.d.). Loans (Mortage) a type of loan that was created for purchasers to be able to
make homeownership more attainable (Amadeo, n.d.)
MARKET AND STATE
 Refers to the relationships among economic units in the market structures whereby interventions/regulations
that are imposed by the government affect the system. Market a system of private ownership and enterprise
that acts based on their own private and self-interest (Schmalensee, 2013). State the governing body of the
society (Arcinas & Mactal, 2016)
- Ballp