Question

3. Briefly discuss two sector circular flow model without saving.​

Answer 1

Answer:

Circular flow of income in a two-sector economy without savings and investment: Participants of the two-sector economy are households and producers. Flow of money from producers to households as payments for the purchase of factor services has been a continuous process. So, there has been the flow of money from households to producers as payments for the purchase of consumer goods and services, This non-stop continuity of inter-sectoral flows is called 'circularity of flows'.