(BBA)

(BBA226-Macroeconomics)
(Fall2023)
------------------------------------------------------------------------------------------------
NAME OF STUDENTS :
STUDENTS ROLL NO& BATCH :
DR OM PRAKASH BOHRA
NAME OF FACULTY:
 Group Discussion-1 ( 15-10-2023) ( 3%)
Question-1
In any economy, dollars flow through markets among households and firms, Explain with
example. ( 2 marks)
In any economy, dollars flow through markets among households and firms, Explain with example

In any economy, dollars flow through markets among households and firms in a cyclical manner. This process is often described
through the circular flow model, which illustrates how money and goods and services circulate in the economy. Let's break down
this concept with an example:

Households: Households are the primary consumers in an economy. They earn income from various sources, such as wages,
salaries, investments, and government transfers.

Firms: Firms, on the other hand, are the producers of goods and services. They hire labor, purchase resources, and produce goods
and services, which are sold to households and other firms.

Here's how the flow of dollars works in this model:

Households earn income: Households receive income by working for firms or from other sources. This income includes wages,
salaries, interest, dividends, and so on.

Households spend on goods and services: With their income, households buy goods and services produced by firms. They spend
on items like groceries, clothing, electronics, healthcare, and entertainment.

Firms receive revenue: Firms earn revenue from selling their products and services to households. This revenue becomes their
income.

Firms pay wages and purchase resources: Firms use their revenue to pay wages to their employees and purchase resources like
raw materials, equipment, and energy to produce more goods and services.

Households provide labor and resources: Households contribute to the production process by providing labor (as employees) and
resources (like land, capital, and entrepreneurship).

Government involvement: The government plays a role by collecting taxes from households and firms and providing various
services like education, healthcare, and infrastructure. Government spending also affects the flow of dollars in the economy.

Example: A company uses the labor of its employees to manufacture and sell cars.

Example: A company uses the labor of its employees to manufacture and sell cars

2
Question-2 ( 1 mark)
A. On the graph, find the point that represents (200 computers, 2000 tons of wheat), label it
would it be possible for the economy to produce this combination of the two goods?
Why or why not?
B. Find the point that represents (300 computers, 3500 tons of wheat), label it. Would it be
possible for the economy to produce this combination of the two goods?