16.2.6
The relationship between businesses and consumers
In Australia, we meet our needs and wants by earning money. This can come from working, government help or investments. We use this money to buy goods and services. When we work, we provide labour to make goods or services for others. When we spend money, we are consumers buying things we need or want. Every day, we make choices like where to buy milk or how to get to school. These choices affect what businesses make and inþuence the economy. FIGURE4 shows how people trade work for money and use that money to buy goods and services. The phrase ‘money makes the world go round’ is a popular expression. It implies, in this context, that without money it would be almost impossible to maintain the many aspects of our lives.
SkillBuilder discussion Communicating 1. Look at FIGURE4 . Do you think money makes the world go round? 2. Is there too much or too little focus on money in our society?
FIGURE4 The interrelationship between consumers and business
3
Households (consumers)
Businesses (producers)
4
2
1
Key
Flow of money
Flow of goods and services
1 Businesses are producers that make or supply goods and services that are distributed to households.
2
Consumers use cards and cash mostly to purchase goods and services.
3
Consumers are often also employed. This means that they have a job and provide businesses with their labour to produce goods and services. Employees receive money in the form of wages for their labour.
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TOPIC16 How markets work 551
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