Economic Activities

1. Describe the role played by the following economic sectors: o Household
 They own the factors of production, which they supply to the market.
 The basic macroeconomic sector that includes the entire, wants and-needs-satisfying population of the economy. The household sector is the eating, breathing, consuming population of the economy. In a word "everyone," all consumers, all people. This sector includes everyone seeking to satisfy unlimited wants and needs.
 Members of the household sector also own all of the factors of production, all resources. Every resource, every worker, every factory, every acre of land, every risk-taking entrepreneur is owned by someone in the household sector.

o Business firms
 The business sector or corporate sector is "the part of the economy made up by companies".
 The business sector includes the profit-motivated firms that engages in the production of goods and services. These firms combine the services of the four factors of production, which they acquire from the household sector, to pursue their productive activities. The primary reason for the existence of the business sector is to produce the goods that satisfy the wants and needs of the household sector.

o Government
 The government sector includes all levels of government--federal, state, and local. These three levels intervene in the economy by collecting and spending tax revenue and by establishing and enforcing laws, rules, and other regulations. The government sector undertakes this intervention because society has deemed that the provision of some goods and services are better handled by the imposition of government than by voluntary market decisions.

o Foreign market
 Includes anything and everything that lies beyond the borders of a nation. The primary role it plays in the domestic economy is foreign. The domestic household, business, and government sectors purchase imports produced in the foreign sector. The foreign sector then buys exports produced by the domestic business sector.
2. Describe the following economic activities: The primary aim of the economic activity is the production of goods and services with a view to make them available to consumer. o Production
 is the act of creating output, a good or service which has value and contributes to the utility of individuals.
 he act may or may not include factors of production other than labor. Any effort directed toward the realization of a desired product or service is a "productive" effort and the performance of such act is production.
 The relation between the amount of inputs used in production and the resulting amount of output is called the production function.

o Distribution
 the way total output, income, or wealth is distributed among individuals or among the factors of production (such as labour, land, and capital).

o Exchange
 Exchanges give companies, governments and other groups a platform to sell securities to the investing public.

o Consumption
 To make use of any commodity of service for the satisfaction of our wants is called consumption.
 The satisfaction of our want by the use of commodities and services. When we use a commodity, we really use its want satisfying quality of utility.
 Direct of Final consumption when the goods satisfy human wants directly and immediately. E.g. taking of meals. Indirect or productive consumption when the goods are not meant for final consumption but for producing other goods which will satisfy human wants, e.g. use of fertilizer in agriculture.

3. Differentiate: o Inflow(injection)
 A diversion of expenditures or funds.
 A non-consumption expenditure on gross domestic product, including investment expenditures, government purchases, and exports. Injections are combined with leakages in the injection-leakage model used to identify equilibrium aggregate output in Keynesian economics.

o Outflow(leakage)
 A diversion of income of funds from the circular flow of income. Savings and imports are considered to be leakage

4. Explain the independence of the different economic sectors using the circular flow diagram.