The resources owned by households are classified as follows.
Human resources – the effort and work of people, e.g., workers, shop assistant, typists.
Natural resources – the gifts of nature, e.g., minerals, animals, plants.
Capital (or producer) goods – man-made goods used to produce other goods and services, e.g., equipment, tools, buildings.
Entrepreneurs – the people who organise the other resources or factors of production used by firms and take risks, e.g., owner of a firm.
Each of the resources earns a reward or receives a payment from the firm which uses it. For example, natural resources earn rent, human resources earn wages, entrepreneurs earn profit, and capital resources earn interest.
As an economy grows (expands) it will influence the flows in the circular flow model. If consumers' demand for goods and services increases, then firms will require additional inputs (resources) to produce the increased output required. In turn, firms will pay households more for the inputs used and households' incomes will rise.