Real flow consists of the movement of factor services from households to business firms and goods and services from business firms to households. Money flow is the movement of factor income from business firms to households and expenditure on goods and services from households to business firms. In a two-sector economy, households provide factor services to business firms and purchase the goods and services they produce, while business firms' factor payments are households' income and households' expenditures on goods and services are business firms' income. Banks accept household savings as deposits and provide loans to business firms for investment, ensuring the total value of product equals total income equals total expenditure.

2. Real flow and Money flow
Flow of factor service from household to business firm
sectors and flow of goods & services from business firm to
household sectors is real flow.
The flow of factor income from business firm sectors to
household sectors and the flow of expenditure on goods &
services from household sectors to business firm sectors is
money flow.

3. In two sector economy, there is dual demand and supply relationship
between household and business firm sectors.
Household are the owner of factor service and business firm are the
producer of goods and services.
household provides factors service to the business firm sectors and
purchase goods and services produced by them.

4. Factor payment is the expenditure of business firm sectors and income
of the household sectors. Similarly, money spend on the purchase of
goods and services is the expenditure of household and the income of
the business firm sectors.
Banks and financial institutions accept the saving of the household as
deposit an provide loan to the business firm sector for investment.
Thus, the value of total product is equal to the value of income is also
equal to the value of total expenditure.

5. Household
Sectors
Business
Firm
Sectors
Factor Services
Financial
Institution
Goods & Services
Household
Expenditures on
Goods & Services