Google
Monday 
March 27, 2017 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
Today's Index
Yesterday's Index
226.1

Help us compile the AmosWEB Free Lunch Index. Tell us about your last lunch.

Skipped lunch altogether.
Bought by another.
Ate lunch at home.
Brought lunch from home.
Fast food drive through.
Fast food dine in.
All-you-can eat buffet.
Casual dining with tip.
Fancy upscale with tip.

More About the Index
Best blue for Monday?

Navy.
Indigo.
Royal.
Sky.
Ice.
Teal.

EURO: The denomination of the so-called single currency that is designed to integrate economic and monetary policies for the European Union. The euro will contain paper currency (banknotes) and metal coins and will replace the European Currency Unit that is presently used for commercial and financial transactions. While that plans are to introduce this single currency with paper and coins in 2002, no one knows for sure if the euro will completely replace national currencies (British pound, French franc, etc.) for transactions within each nation. The paper currency will come in denominations of 5, 10, 20, 50, 100, 200, and 500 euros and the metal coins will come in denominations of 1, 2, 5, 10, 20, and 50 cents, as well as 1 euro and 2 euros.

Visit the GLOSS*arama


PHYSICAL FLOW:

In the circular flow model, the transfer of goods and services from the business sector to the household sector and the transfer of resource services from the household sector to the business sector. The physical flow is usually illustrated as a counter-clockwise flow for a model with the product markets at the top, resource markets at the bottom, household sector at the left, and business sector at the left. The payment flow moves in the opposite direction.
The physical flow, the physical movement of goods and services, is the foundation of the circular flow model. The fundamental problem of scarcity is addressed by physically transforming scarce resources into goods and services that are then used to satisfy wants and needs. This requires the physical exchange of commodities between the household sector, which has the resources, and the business sector, which produces the goods.

A Simple Example

For example, when Alicia Hyfield buys a Waldo's Super Deluxe TexMex Gargantuan Taco this taco "flows" from the Waldo's TexMex Taco World in the business sector through the product markets and ends up in the possession of Alicia, a member of the household sector.

In addition, the labor services of Edgar Millbottom, an employee of Waldo's TexMex Taco World, "flows" from the household sector through the resource markets and ends up with Waldo's TexMex Taco World in the business sector, where it is used in the production of an Waldo's Super Deluxe TexMex Gargantuan Taco.

A Simple Model

The Physical Flow
Circular Flow
This diagram illustrates the physical flow aspect of the circular flow. This is, by the way, the simplest version of the circular flow model. This model contains two sectors. At the far left is the household sector, containing people seeking consumption. At the far right is the business sector doing the production. Two sets of markets are also included. At the top are the product markets that exchange final goods and services, or gross domestic product. At the bottom are the resource markets that exchange the services of the scarce resources.

A reasonable starting point for tracing the payment flow is the household sector. Because it owns all resources, it supplies the services of these resources to the business sector through the resource markets. The business sector then uses the resources to produce the goods and services that are then supplied to the household sector through the product markets. This flow of resources from the household to the business sector and production from the business to the household sector is the physical flow.

Running Through the Physical Flow

How about a few notable points on this physical flow?

  • First, focusing on product markets, the household sector is the demand-side and the business sector is the supply-side. Production flows from the business sector to the household sector through the product markets.

  • Second, looking at resource markets, the household sector is the supply-side and the business sector is the demand-side. Resource services flow from the household sector to the business sector through the resource markets.

  • Third, the household sector sells the resources through the resource markets and buys goods through the product markets. The household sector does the consumption. It supplies the resources that are used to produce the consumption goods that satisfy wants and needs.

  • Fourth, the business sector buys resources through the resource markets and sells goods through the product markets. The business sector does the production. It buys the resources that it transforms into wants-and-needs-satisfying goods.

A Word About the Payment Flow

The physical flow of goods, services, and resources is countered by the payment flow that moves in the opposite direction. The payment flow is the movement of money payments from the household to the business sector in exchange for final goods and services and from the business to the household sector in exchange for the services of resources. The payment flow is usually represented as a clockwise movement.

<= PHENOMENONPHYSICAL SCIENCE =>


Recommended Citation:

PHYSICAL FLOW, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2017. [Accessed: March 27, 2017].


Check Out These Related Terms...

     | circular flow | payment flow | two-sector, two-market circular flow | two-sector, three-market circular flow | three-sector, three-market circular flow | four-sector, three-market circular flow |


Or For A Little Background...

     | macroeconomic markets | product markets | resource markets | macroeconomic sectors | household sector | business sector | production | consumption | model | market | exchange | economy |


And For Further Study...

     | business cycles | macroeconomic goals | macroeconomic problems | macroeconomic theories | paper economy | gross domestic product | inflation | unemployment |


Search Again?

Back to the WEB*pedia


APLS

State of the ECONOMY

Wholesale Inventories
November 2016
$594.5 billion
U.S. Dept. of Commerce

More Stats

ORANGE REBELOON
[What's This?]

Today, you are likely to spend a great deal of time at a crowded estate auction wanting to buy either a rechargeable flashlight or storage boxes for your computer software CDs. Be on the lookout for the happiest person in the room.
Your Complete Scope

This isn't me! What am I?

One of the largest markets for gold in the United States is the manufacturing of class rings.
"One day at a time - this is enough. Do not look back and grieve over the past, for it is gone: and do not be troubled about the future, for it has not yet come. Live in the present, and make it so beautiful that it will be worth remembering."

-- Ida Scott Taylor, Author

D
Demand
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2017 AmosWEB*LLC
Send comments or questions to: WebMaster