Question

2. What do you mean by real flow and money flow?​

Answer 1

Explanation:

Real flows refer to the flow of the actual goods or services,

●while money flows refer to the payments for the services (wages, for example) or consumption payments

Answer 2

Answer:

This answer is based on the example of a two sector economy.

1) In a two sector economy, there are firms and households.

2) Households provide factor services to firms and firms hire these services.

3) Firms pay factor payments to households and households purchase goods and services from firms which households buy.

4) There is no saving done by the firms or the households.

The flow of payments (as factor payments and purchases of goods and services, covered in (3) ) is money flow.

The flow of factor services and goods is considered to be real flow.

Hope this helps.

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