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 The income received and payments made by
each groups.
Flows
Real
Flow
Money
flow
• Exchange of goods &
services between
...
Production
Units
Household
(factor owners)
Income Generation Income
Distribution
Income
Spending
Income is first generated...
Rest Of
World
Government
Sector
Household
Sector
Producing
Sector
Factor Services
(Land, Labor, Capital and Enterprise)
Consumption Expenditure
(On Goods and services)
Factor Payments
(Ren...
Financial
Market
Factor Payments
Consumption Expenditure
Savings
Borrowings
Savings
Borrowings
circular flow of income
circular flow of income
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circular flow of income

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its a circular flow of income which includes all the sectors in economy

Published in: Economy & Finance
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circular flow of income

  1. 1.  The income received and payments made by each groups. Flows Real Flow Money flow • Exchange of goods & services between households & firms • Barter is system is adopted for exchange. • Monetary exchange between two sectors. • Exchange happens from money so its free from barter system.
  2. 2. Production Units Household (factor owners) Income Generation Income Distribution Income Spending Income is first generated in production units, then distributed to households and finally spent on goods & services produced by these units to make circular flow complete its course.
  3. 3. Rest Of World Government Sector Household Sector Producing Sector
  4. 4. Factor Services (Land, Labor, Capital and Enterprise) Consumption Expenditure (On Goods and services) Factor Payments (Rent, wages, Interest and Profit) Goods and Services
  5. 5. Financial Market Factor Payments Consumption Expenditure Savings Borrowings Savings Borrowings

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