The Interaction among the
Private and Public Sectors
of the Economy
Group 3
Hoi Wan Chan
Jamie Desappio
Lynean Graham
Katarzyna Grabowska
Marina Ristic
Yi Shao
Question 5
 How
do the private sectorshouseholds, business, and the
international sector-interact in the
economy?
Saving
Financial
Intermediaries
Investment
Payment for Goods and Services
Goods and Services
Households
Resources Services
Payments for Resource Services
Firm
(Business Sector)
The Household Sector

Selling their resource services to business in
exchange for money payments.

Spending their income for goods and services
produced by the firms.

Place the balance in savings vehicles via
financial intermediaries.
The Business Sector (Firms)

Employing the services of resources in order to
produce goods and services.

Pay households for their resource services.

Borrowing money from financial intermediaries
expansion of their productive capacity.
Households and business interact
with each other by means of
buying and selling.
Saving
Financial
Intermediaries
Investment
Payment for Goods and Services
Goods and Services
Households
Firm
(Business Sector)
Resources Services
Payments for Resource Services
Foreign Countries
(International Sector)
Exports
Imports
Net Exports
Payments for Net Exports
The International Sector
(Foreign Countries)

Firms import goods and services from foreign
countries and sell these goods and services to
household.

Firms pay for goods and services from foreign
countries.

Firms export goods and services to foreign
countries.
Question 6
 How
does the government interact
with the other sectors of the
economy?
Financial
Intermediaries
Saving
Investment
Payment for Goods and Services
Goods and Services
Taxes
Households
Taxes
Govt Svcs
Govt Svcs
Government
Resource Svcs (Public Sector)
Goods & Svcs
Payment for
Resource Svcs
Payment for
Goods & Svcs
Firm
(Business Sector)
Resources Services
Payments for Resource Services
Foreign Countries
(International Sector)
Exports
Imports
Net Exports
Payments for Net Exports
The Public Sector
(The Government)

Households sell resources to the government in
return for income

Business firms sell the goods and services the
produce to the government for revenue

Taxes are the income the government receives
from households and firms
$130
Bank of America
$130
$50
MP3 Players, laptops
Taxes $20
Programmers
Financial Aid
Labor
Taxes $50
U.S.
Government
$100
Charter
Dell
Computer Rental
$200
Labor
Wages $100
Exports
Imports
China
Net Exports
$250
END