Portfolio

Portfolio

Circular flow of income

Expenditure (E

Income (Y

The circular flow of income is a simple model which is meant to illustrate how money moves around in an economy therefore , this flow is shown in the figure above : firms use factors of production provided by households , which usually are land , labour , capital and entrepreneurship they are used by firms to produce a good or service The households are given a certain amount of money by firms , which might be rent for land , wages for labour , and interest for capital

and profit for entrepreneurship . These rewards are materialized into the households ' income

When households receive this income they use it to buy the goods and services from the firms . This we call expenditure and we use the letter E to signify it . Note that in this two sector model households spend all their income with firms ' The expenditure is made of three parts : the consumption (c , which represents the money households spend on goods and services , the investment , which is the money spent by firms on other firms , the government spending and the exports . Moreover , the households ' income would be spent on the government under the form of taxes , on imports , and a part would become savings

Subsistence economy

The term subsistence economy refers to an economy in which people obtain the necessities of life through self-provisioning . Moreover , the subsistence economy is not based on any kind of currency , wealth existing rather in the form of natural resources . The main of this is food , which is not bought , but grown or hunted , and all the materials needed , such as wood , are taken from nature . Only very short surpluses generally exist , and therefore there is a reliance on renewal and reproduction within the natural environment to ensure survival . For this reason subsistence economies are often lauded by environmentalists who consider market systems too much of a strain on the environment

Subsistence economies can hardly be found nowadays even though , some experts argue that the British NHS - National Health Service- is a concluding example in this perspective . This type of economy still exists in many developing countries , with a very high poverty rate but not any there since there are some rural areas in Great Britain as well more specifically in Scotland , where people live from their work

The text The Economic organization of a

.O .W Camp ' describes the life of the prisoners of a camp in Italy , named Oflags , with approximately 1500 prisoners , housed in a number of separate but intercommunicating bungalows , which were placed in buildings of around 200 each . The prisoners ' life had been adapted to the scarce resources and hard life conditions , and one important aspect of their existence was the development of a subsistence economy . Practically , all the goods they received form the Red Cross - clothes , food , such as sweets , sugar butter , milk , etc and - used to be traded among them . The interesting fact was that they did not use to evaluate food according...