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Question
Answer the following question.
Give any two examples of the flow concept.
Solution
Two examples of flow concepts are capital formation, interest on capital.
RELATED QUESTIONS
Explain the circular flow of income.
What are the four factors of production and what are the remunerations to each of these called?
Why should the aggregate final expenditure of an economy be equal to the aggregate factor payments? Explain.
Answer the following question.
With the help of a diagram, show the circular flow of income in a two-sector model with Savings and Investment.
Money flow is the flow of ____________.
Which of the following is an example of macroeconomics?
Which one of the following is included in circular flow?
Which services are provided by families to a firm?
Which one is the limitation of Macro Economics?
Draw a well labelled diagram of two sector model of a circular flow of income including the financial sector.
Read the below case and answer the question that follow:
Circular Income Flow in a Two Sector Economy: In the figure given we can see that upper loop shows the resources such as land, capital and entrepreneurial ability flow from households to firms in the direction shown by the arrow direction.
The money flows from firms to the households as factor payments in the form of wages, rent, interest and profits, shown by the arrow direction.
The lower part of the figure shows the flow of money from households to firms in the form of consumption expenditure done by the households to purchase the goods and services produced by the firms, making the flow of goods and services from firms to households.
Thus, we see that money flows from business firms to households as factor payments and then it flows from households to firms. Thus, there is, in fact, a circular flow of money or income. This is how the economy functions.
Money Flows from ______ to ______ as factor payments.
Read the below case and answer the question that follow:
Circular Income Flow in a Two Sector Economy: In the figure given we can see that upper loop shows the resources such as land, capital and entrepreneurial ability flow from households to firms in the direction shown by the arrow direction.
The money flows from firms to the households as factor payments in the form of wages, rent, interest and profits, shown by the arrow direction.
The lower part of the figure shows the flow of money from households to firms in the form of consumption expenditure done by the households to purchase the goods and services produced by the firms, making the flow of goods and services from firms to households.
Thus, we see that money flows from business firms to households as factor payments and then it flows from households to firms. Thus, there is, in fact, a circular flow of money or income. This is how the economy functions.
Which of the following is not an assumption of a two sector model of Circular Flow of Income?
Identify the correctly matched pair of the items in Column A to those in Column B:
| Column A | Column B |
| 1. Money Flow | (a) Depreciation |
| 2. Real Flow | (b) Factor Services |
| 3. Trade Flow | (c) House Work by Housewife |
| 4. Capital Flow | (d) Inventory |
Giving valid reasons, explain how the following would be treated while estimating domestic income?
- Payment made by a Japanese tourist for goods purchased in India.
- Broker's commission on the sale of second hand goods.
On the basis of the figure given below, identify the type of flow indicated by B and D:
