![]() Then NZ must borrow the difference overseas. Export receipts exceed Import payments or aĭeficit i.e. Leaving NZ compared to how much money is entering NZ. ![]() The balance of payments is a measure of how much money is ![]() (export receipts) and out of NZ to overseas suppliers as payment NZ imports a number of items, these include cars, petrol, fruit etc. Receipts is the money flow that corresponds 5 percent) and the interest rate they chargeįinancial sector acts as an intermediary between households who want to save money and firms who want to borrow moneyĮxports a number of goods and services overseas, these include dairy products,īeef, lamb, tourism, etc. Producers are borrowing to invest in new businesses or or expansion.įinancial Sector makes a profit from the difference between the interest Investment from the financial sector to producersĬan also be in the form of Venture Finance. To be invested) and producers (who need money to invest). The Financial Sector acts as an intermediary between households (with savings Machinery or buildings or anything that is used in the production process In Economics is the buying of capital goods, this means the buying of more buildings, machinery or forĪ farmer more land, stock, and fertilizer etc. Loans to producers wanting to expand e.g. The Financial Sector use these savings to make As income increases people tend to save more. SavingsĬan be deposited in banks or other firms in the financial sector and earn Rely on producers for Income and Commodities and produicers rely on households There is a mutual dependence - they are interdependent. Households rely on Producers for IncomeĪnd Commodities and Producers rely on Households for Labour and Consumption Consumer spending or consumption spending (linked with commodities).Īnd producers rely on each other. Money Flows look at the flow of money through the economy. Real Flows look at the flow of physical things through the economy. We will be looking at both money flows and real flows. Resource markets, the domestic money market and the foreign exchange market.Ĭircular flow model shows how the FIVE different sectors of the economy are Inherent in the model, including the finished goods and services market, the Interdependence of households, producers, government, the financial sector Start your journey towards better communication, informed decision-making, and enhanced understanding by exploring Venngage's template library today.Diagram(s) in real and money terms (this may involve the construction of a By choosing Venngage's cutting-edge graphic design platform, you'll gain access to a comprehensive library of customizable templates, user-friendly design tools, and real-time collaboration features that streamline the creation process. Our drag-and-drop interface allows users of all expertise levels to create impressive, professional-looking circular flow diagrams with ease.Īdditionally, Venngage offers a wide range of icons, images, and fonts to further customize and enhance your circular flow diagrams, making them both visually captivating and informative.Ĭircular flow diagrams are an indispensable tool for visualizing and understanding interconnections within an economy, as well as communicating economic and business concepts. We have a vast collection of professionally-designed and customizable circular flow diagram templates suitable for various industries and use cases. Our powerful design platform is suited for crafting high-quality circular flow diagrams tailored to your specific requirements. When creating a circular flow diagram, selecting a platform that blends flexibility and user-friendliness is crucial. They are particularly useful for illustrating cause-and-effect relationships between different sectors in an economy, enabling stakeholders to readily identify patterns, assess trends, and make informed decisions. Using circular flow diagrams simplfies complex economic concepts, facilitating clear communication of ideas, and provide a visual aid for analysis and decision-making. These diagrams highlight the interactions between various economic agents, such as households, businesses, and governments, demonstrating the continuous flow of money, products, and services that drive economic activity. Circular flow diagrams are widely used in economics, business, and education to represent the exchange of resources, goods, and services within an economy.
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