ECONOMICS

Construct and explain briefly the circular flow of goods and services.

In
economics,
the circular
flow model
describes the exchange of goods and
services and money between households and
businesses. It also describes the process
through which households sell the factors of
production (labor resources), which firms
use to produce output, to businesses. It is a
basic yet useful model of how markets work.

In the circular flow model, there are two kinds

of market participants - households and firms - and two kinds of markets - the product market,
referred to as the "Goods Market" in Figure 1, and the resource market. The product market is
the market in which businesses, or firms, sell goods and services to households. In the product
market, firms are on the supply side and households, or consumers, are on the demand side. In
the resource market, households sell the factors of production that are used to make goods and
services - labor entrepreneurial ability - to firms. Therefore, in the resource market, households
are on the supply side and firms are on the demand side. The flow of goods and services from
firms to households is called the physical flow and is represented in Figure 1 as the outer flow
that runs counterclockwise.

How the economists measure the economic growth.

The economists can measure the economic growth by using charts and graphs that
focuses on income and loss. With this the economists should be able to have if not exact
at least close estimates amounts regarding economic gain. Economists usually measure
economic growth by the increase in (real) GDP.

Meaning of the ff:

o Gross National Product
the total value of the goods and services produced by the residents of a
nation during a specified period (as a year)
the value of all the goods and services produced in an economy, plus the
value of the goods and services imported, less the goods and services
exported.
ang kabuuang halaga ng mga produkto at serbisyo na nagawa ng isang
bansa sa loob ng isang taon.

Gross Domestic Product

the monetary value of all the finished goods and services produced within
a country's borders in a specific time period
the total market value of all the goods and services produced within the
borders of a nation during a specified period.

National Income
National income is the total value a countrys final output of all new goods
and services produced in one year. Understanding how national income is
created is the starting point for macroeconomics.
The total net value of all goods and services produced within a nation
over a specified period of time, representing the sum of wages, profits,
rents, interest, and pension payments to residents of the nation.

PURCHASING POWER OF PESO

shows how much the peso in the base period is worth in another period.
It gives an indication of the real value of the peso in a given period
relative to the peso value in the base period.

PER CAPITA INCOME

a measure of the amount of money that is being earned per person in a
certain area.
the total national income divided by the number of people in the nation

CONSUMERS PRICE INDEX

a measure that examines the weighted average of prices of a basket of
consumer goods and services, such as transportation, food and medical
care.
A comprehensive measure used for estimation of price changes in a
basket of goods and services representative of consumption expenditure
in an economy