The Economic Cycle
Production, distribution and consumption
Production, Distribution and Consumption
The economic cycle shows how goods move from producers to consumers. Production creates goods, distribution moves them to markets, and consumption is when people buy and use them. Money flows in the opposite direction — from consumers to producers.
Example
Following the Cycle
Example: A loaf of bread
1. Production: Farmer grows wheat → miller makes flour → baker bakes bread
2. Distribution: Trucks deliver bread to shops
3. Consumption: You buy and eat the bread
Money flows back: You pay shop → shop pays baker → baker pays miller → miller pays farmer
Each step adds value and creates jobs.
Note
Remember
The economic cycle is continuous — it never stops. If one part breaks (e.g., no trucks for distribution), the whole cycle is affected. In SA, we saw this during load shedding — factories couldn't produce, affecting jobs and availability of goods.
Key Vocabulary
Economic cycleThe flow of goods and money between producers and consumers
ProductionMaking goods or providing services
DistributionMoving goods from where they are made to where they are sold
ConsumptionBuying and using goods and services
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Economic cycle
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