Liz's Business
Circular Flow Diagram
A circular flow diagram shows how money and products are exchanged throughout the economy. It shows how households, business, resource market, and product market are all connected.
Functions of Money
* Store of Value
* Measure/ Standard of Value
* Medium of Exchange
Voluntary Exchange
When one makes a voluntary exchange they are going through a process that occurs when people specialize in producing one good or service and then trade for other goods and services.
Barter
When you trade products with another person without the use of money.
Market
When buyers and sellers are present in a particular place.