Capital goods are purchased by firms.

Households are responsible for the spending on consumer goods.

Consumers are rational, in other words, they will always try to maximise their satisfaction given the means at their disposal.

Income is earned by the four factors of production.

A large house and a savings account at a commercial bank forms part of wealth.

Wealth and income have the same meaning.

The production factor entrepreneurship earns profit.

Wages and salaries are earned by the production factor labour.

Rent is the income earned by the production factor capital.