Circular flow diagram5/30/2023 For example, the wage income received by consumers is in return for labor services that flow from households to firms. Corresponding to the flows of money in the circular flow, there are flows of goods and services among these sectors. There are two sides to every transaction. This relationship lies at the heart of macroeconomic analysis. From a simple version of the circular flow, we learn that-as a matter of accounting- gross domestic product (GDP) = income = production = spending. The circular flow of income describes these flows of dollars (pesos, euros, or whatever). As individuals and firms buy and sell goods and services, money flows among the different sectors of an economy. The circular flow of income describes the flows of money among the five main sectors of an economy.
0 Comments
Leave a Reply. |