According to this diagram showing the circular flow of goods and resources, where do individuals spend the income they earn?

the revenue from the Product Market gets from consumer spending

In business, products are goods or services that can be traded. In marketing, a product is anything that can be offered to a market and can satisfy a desire or need. At the retail level, products are often referred to as merchandise. In manufacturing, products are bought in the form of raw goods and sold as finished goods. Products in the form of raw goods such as metals or agricultural products are often referred to as commodities.

In wider use, a product can refer to an item or unit, a group of the same product, a group of goods and services, or an industrial grouping of goods and services.

Consumption is the expenditure of consumers to buy goods and services. The main factor that determines a consumer's consumption of goods and services is the level of the consumer's income. The level of income has a positive effect, in the sense that if consumer income rises, consumer spending will also increase, and vice versa.

The level of prices of goods and services on the market also determines the spending

consumption of a consumer. This relates to the real income received by these consumers. Nominally, consumer income may be the same every period but if prices increase from time to time, this will result in a decrease in one's purchasing power. In other words, the price level is negatively related to expenditure

consumption. If prices increase, consumption expenditure will decrease, and vice versa.

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Product Markets

Consumer Spending

Details

Class: High School

Subject: Business

Keywords: Product, Markets, Spending