household

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household

a group of individuals whose economic decision-making is interrelated. In economic theory, households perform two roles. On the one hand, they enter the market place as buyers or CONSUMERS of goods and services produced by firms; on the other hand, they provide FACTOR INPUTS to firms in order to produce those goods and services. The term ‘households’ is used primarily in macro- (national income) analysis, while the term ‘consumers’ is used in micro- (supply and demand) analysis. See CIRCULAR FLOW OF NATIONAL INCOME MODEL, PERSONAL SECTOR.
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