Implementing the Circular Flow Diagram

We pass things in our life everyday and it never even crosses our mind how they those material possessions arrived in our lives and what it took to get them there. I walked into my home the other day and passed the washing machine. That is such a good example. I have always just taken advantage of that being so easily assessable. I never thought of how much it took to get that there. I tried to think of all the steps it took to make that washing machine a reality and how it came to be sitting in my house. Then I realized the microeconomics had given me the answer. I happen to be from Clyde, Ohio where Whirlpool manufacturers washing machines. Someone, such as my neighbor and Whirlpool employee, Bob Godeicke, goes to work everyday so that he can make money for all the things he wants in his life. The washing machines are made with the money the firms give out for wages, rent, and their profits from other things. Then the washing machines are ready to be sent out on the Whirlpool semi truck. They are sold to a store that pays for them with the money they have previously brought it. The stores sell the washing machines to people who are willing to spend their money on that product; such as my Dad was when he bought our washing machine. He had money to buy it because he worked at his job as a Dentist for a long time. People came in and traded their money for a root canal or teeth cleaning. The entire process is quite fascinating when you think about it. So many things have to take place for the end result to occur. Economists have made this process seem so simple by putting together the Circular Flow diagram, but it still really amazes me that all these steps can occur so seamlessly the vast majority of the time. I never would have thought about how that entire process actually happens before taking this class.

Ali Woodruff
Econ 200
8:00-9:48 AM Tuesday and Thursday