circular flow chart

1. In the flow chart, there are two markets . they divide into the Resource Market and the Product Market. Households play a role in the Resource Market by sending Supply and receiving money income, while Businesses send Costs and receive Demands. Households give Consumer Expectation to the Product Market while receiving goods and services. Businesses gives goods and services to the Product Market while receiving revenue.

2. Adding up all of the income earned by households and firms in a single year is the Income Approach and can be calculated by adding wages, rents, interest, profit, and statistical adjustment. Adding up the market value of all domestic expenditures made on final goods and services are considered Expenditure Flows and can be calculated by using "GDP = C + Ig + G + Xn"

3.GDP is the statistics on production of goods and income for a certain country during a year. A foreign-owned factory in the US would avoid certain taxes compared to a US owned factory.

4.GDP makes sure it does not count the same item multiple times, by not including certain things as GDP. These consist of Intermediate goods which are basically items that are not considered as the finished product, Secondhand goods that are considered used, Non Market activity, Financial Transactions, and Gifts.