Explain Different Phases of Circular Flow of Income
Chapter 7 - Employment. The only difference in the circular flow of income between a closed economy and an open economy is that in a four-sector economy households purchase foreign-made goods and services ie imports. Class 12 Economics Circular Flow Of Income Types Of Markets Likewise people of other countries purchase goods and services not produced domestically ie exports. . The circular flow of income or circular flow is a model of the economy in which the major exchanges are represented as flows of money goods and services etc. Primarily it looks at the way money goods and services move throughout the economy. So there is a circular and continuous flow of money income as the entire factor payment is received back with firms through consumption expenditure. These are land labour capital and entrepreneurship. In an economy households provide factors of production such as labour to firms. Production Phase-The production p...