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Fundamentals of economics

I need your HELP answering these questions:

1. Explain how the circular flow diagram illustrates the interaction of households, governments, and business?

2. Illustrate market equilibrium using supply and demand curves?

3. Differentiate between movement along and shift of the demand curve?

4.Explain the relationship between market and aggregate supply and demand?

Can your answers be in paragraphs and can you give me the sources.
Also can you give me the meanings to circular flow diagram, market equilibrium, demand curve and aggregate?

Thank you, your HELP is GREATLY needed and appreciated.

Solution Preview

Hi there,

Here are your answers:

Circular Flow Diagram:
The circular flow diagram divides the economy into two sectors: one concerned with producing goods and services, and the other with consuming them. Resources are converted into goods and services by business, and in this transformed state travel back to consumers. Money flows in the opposite direction. These flows involve two markets in which exchange takes place: the resource or factor market in which business buys resources, and the goods and services market in which business sells goods.

source: http://ingrimayne.saintjoe.edu/econ/TheFirm/CircularFlow.html

Market Equilibrium:
Markets exist in all types of goods and services, and as economists, we are interested in how they work and what causes them to change.

The market price is determined by the interaction of market supply (producers) and market demand (consumers).

The point ...

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