FIGURE3 Model showing the flow of money, goods and services between households and businesses.
Households provide businesses with labour
Businesses pay households in the form of wages and salaries
Households purchase goods and services from businesses
Businesses
Households
Businesses produce goods and services which is supplied to households
The decisions made by the household sector in terms of what goods and services they purchase informs the business sector what goods and services to produce. Knowing what goods and services to produce determines which limited resources are allocated to the production of goods and services.
SkillBuilder discussion Interpreting and analysing data and information 1. Study the diagram in FIGURE3 .What are ‘households’? 2. Explain how households rely on businesses. 3. Explain how businesses rely on households.
21.2.2 The financial sector Some of us receive pocket money (or an allowance from our parents or caregivers), some of us receive money in return for the work we do, and some of us receive both. As a young person, you may be told ‘don’t spend it all at once’. This is where savings come in. While most people of your age don’t save much, many of us in the economy do put aside some of our income as savings. This money is usually deposited in a bank or similar financial institution .
SkillBuilder discussion Communicating 1. Are you a saver or are you a spender? 2. How much do you save each month? 3. Would you like to be able to save more money? How might you do this?
FIGURE4 The Commonwealth Bank is one of the largest Australian banks.
TOPIC21 Understanding tax and consumer literacy 601
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