Household Sector Essay

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Household Sector includes all members of society who consume goods and services. Households provide the Factors of Production businesses require to be successful - for example land, skills, resources, equipment and innovative ideas. In exchange, business pay wages to households. Because households consume goods and services and provide factors of production, “this means that the other two domestic sectors - business and government - exist to satisfy the wants and needs of the household sector” (AmosWEB Encyclonomic WEBpedia, 2016). Leakages to the GDP occur when households purchase goods and services which are taxed by the Government, or when households consume goods that are imports where the profits are sent to other countries, and also money saved by households isn’t included in the GDP. Business Sector includes firms who seek profits by producing goods and services. Businesses utilise factors of production and people provided by the household sector to produce goods and …show more content…

Businesses pay taxes to the Government and receive revenue from Government contracts. Injections are made to the GDP when businesses make capital investments which help boost production and promote economic growth, and when businesses sell products produced in New Zealand to other markets. Financial Sector includes the savings of households from their income. Money not spent is invested into the financial sector. Savings can be lent to other sectors, majorly the business sector, to make investments or to purchase capital goods. Upon paying back the loan, money is made through interest. The financial sector includes insurance companies, banks and real estate. The financial sector pays taxes to the Government. They receive revenue from interest on loans and repayment of

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