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Circular Flow In The Economy

Autor:  Woxman  08 September 2011
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Assignment 1.1 Forum Discussion: Circular Flow of the Economy

Anita Jones-Quiñones

Jiuajq922@jiu.edu

Jones International University

Economic Theory and Applications – MBA 502-UF

September 5, 2011

Circular Flow as the result of two initial transaction payments

This assignment will illustrate systems thinking skills showing how an initial transaction by one economic actor affects the households and public and private entities in the circular flow of the economy.

The Circular Flow of Economy portrays the flow of expenditures and economic activity of the economic actors in the macroeconomy (Farnham, p10). I will illustrate how the purchase of my home as a first time home buyer affected the circular flow cycle and other economic actors. The second illustration is the government offering opportunities for consumers to own property through the Housing and Recovery Act of 2008 and the American Recovery and Reinvestment Act of 2009.

I had to move a year and a half ago. The first time home buyers credit was the incentive for me to own piece of real estate. A home appraisal is required to appraise the property market value that is based on established methods and the professional judgment of the appraiser which is paid for by the seller of the property. Prior to my desire to purchase a house, I needed to get a pre-approval letter indicating my package to purchase a home was pre-approved by a lender to provide financing my mortgage to purchase a home. A mortgage company provides the financing to generate a home mortgage loan for which I have to qualify for. I enter the cash-flow of the economy when I establish an official relationship through a contract to act as my buying agent. The realtor’s wage is three (3) percent of the sale which will be paid at the close of the sale of the house. The real estate broker negotiates the sale between the seller and buyer and takes at least 50 percent of the house sale. Once I chose a house to buy and entertained the seller’s offer, I paid a good faith down payment. The good faith payment goes to the Seller at the close of the sale of the house. Once the offer for purchase is accepted by me, a home inspector is hired to conduct a visual survey of the property to be purchased that will assess the property’s structure, functioning of its systems and condition of the home. The home inspector wages are paid by buyer. The sales contract is usually contingent on the home inspector’s report. The seller has to agree to fix the discr ...