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CH 1 CIRCULAR FLOW OF INCOME, WhatsApp Image 2023-10-08 at 21.48.19…
CH 1 CIRCULAR FLOW OF INCOME
CIRCULAR : FLOW OF INCOME
THERE ARE 3 PHASE IN CIRCULAR FLOW OF INCOME
PHASE 1
DISTRIBUTION PHASE
IN THIS PAHSE THE FIRMS PRODUCE GOODS AND SERVICES WITH THE HELP OF FACTOR SERVIES (LAND , LABOUR,CAPTIAL, ENTERPRE..)
PHASE 2
INCOME PAHSE
iN THIS PAHSE THE FIRMS DO PAYMENT TO HOUSEHOLDS FOR USING THERE FACTOR SERVICES
PHASE 3
DISPOSTION PHASE
In this income received from factor service will spent on good and service produced by firms\
TYPES OF CIRCLUAR FLOW
REAL FLOW
Real flow refers to the flow of F.S from H.H to firms and Flow of Good and Services from firm to H.H
ANOTHER NAME IS
PHYSICAL FLOW
NO MONEY INVOLVED
MONEY FLOW
MONEY FLOW refers to flow of consumption expenditure from house hold to firm or repayment of factor services from firm to household with the use of money
ANOTHER NAME IS
NOMINAL FLOW
MONEY INVOLVES
STOCK AND FLOW
FLOW CONCEPT
Flow variable means those variables which can measure over a period of time
yes it is time dimension (hour, week, month, year)
example - we measure our population in every 10 years of our county
STOCK CONCEPT
Stock variable means those variables which is measure at a particular point of time
IT IS NOT TIME DIMEISATION
EXAMPLE - THE STOCK IS MEASURED ON 31 ST MARCH 2023
CIRCULAR FLOW IN 2 SECTOR ECONMY
OPEN ECONOMY
THERE IS ECONOMY REALTION WITH OTHER COUNTRIES
3 SECTOR ECONOMY
CLOSED ECONOMY
THERE IS NO ECONOMY REALTION WITH OTHER COUNTRIES
2 SECTOR ECONOMY
2 SECTOR ECONOMY MEANS THERE ARE ONLY HOUSEHOLD AND PRODUCER SECTOR
THERE IS NO SAVING AT ALL
