The Interaction among the Private and Public Sectors of the Economy

1
The Interaction among the Private and Public
Sectors of the Economy

• Group 3
• Hoi Wan Chan
• Jamie Desappio
• Lynean Graham
• Katarzyna Grabowska
• Marina Ristic
• Yi Shao

2
Question 5

• How do the private sectors-households, business,
  and the international sector-interact in the
  economy?

3
Financial Intermediaries
Saving
Investment
Payment for Goods and Services
Households
Firm (Business Sector)
Goods and Services
Resources Services
Payments for Resource Services
4
The Household Sector

• Selling their resource services to business in
  exchange for money payments.
• Spending their income for goods and services
  produced by the firms.
• Place the balance in savings vehicles via
  financial intermediaries.

5
The Business Sector (Firms)

• Employing the services of resources in order to
  produce goods and services.
• Pay households for their resource services.
• Borrowing money from financial intermediaries
  expansion of their productive capacity.

6
Households and business interact with each other
by means of buying and selling.
7
Financial Intermediaries
Saving
Investment
Payment for Goods and Services
Households
Firm (Business Sector)
Goods and Services
Resources Services
Payments for Resource Services
Foreign Countries (International Sector)
Exports Imports
Net Exports
Payments for Net Exports
8
The International Sector(Foreign Countries)

• Firms import goods and services from foreign
  countries and sell these goods and services to
  household.
• Firms pay for goods and services from foreign
  countries.
• Firms export goods and services to foreign
  countries.

9
Question 6

• How does the government interact with the other
  sectors of the economy?

10
Financial Intermediaries
Investment
Saving
Payment for Goods and Services
Goods and Services
Taxes
Taxes
Households
Government (Public Sector)
Firm (Business Sector)
Govt Svcs
Govt Svcs
Resource Svcs
Goods Svcs
Payment for Resource Svcs
Payment for Goods Svcs
Resources Services
Payments for Resource Services
Foreign Countries (International Sector)
Net Exports
Exports Imports
Payments for Net Exports
11
The Public Sector(The Government)

• Households sell resources to the government in
  return for income
• Business firms sell the goods and services the
  produce to the government for revenue
• Taxes are the income the government receives from
  households and firms

12
Bank of America
130
130
50
MP3 Players, laptops
Programmers
U.S. Government
Taxes 20
Taxes 50
Dell
Financial Aid
Charter
Labor
Computer Rental
200
100
Labor
Wages 100
China
Net Exports
Exports Imports
250
13
END