The Circular Flow of the Economy 1 © 2011, 2005 P. LeBel Imported Inputs and Semi-Finished Goods Physical Inputs Factor Physical Inputs Markets Factor Purchases Factor Income Taxes and Taxes and Borrowing Borrowing Firms Expenditures Government Expenditures Households Government Taxes Government Savings and Borrowing and Repayments Firm Income Product Household Purchases Goods and Services Markets Goods and Services Savings and Savings and Repayments Repayments Financial Intermediaries Loans and Loans and Withdrawals Withdrawals Goods & Services Exports Purchases of Finished Imports Export & Foreign Investment Income Imported Goods & Services International Transactions The Structure of Factor Markets Inputs in Production Functions Factor Market Payments and Technology: Land - N Rent -R Labor - L Wages - W Capital - K Interest - I Entrepreneurship - E Profit - Pr