Question

Circular flow of income and expenses helps to identify leakages and Inflows. O True Or False​

Answer 1

Answer:

– The circular flow of economic activity is an economic model that shows the flow of money through the economy. This model shows the most common circular flow of income between the household sector and the business sector. There are product markets and resource markets between the two.

Households purchase goods and services that businesses provide through the product market. Trade, meanwhile, requires resources to produce goods and services. Members of families provide labor to businesses through the resource market. In return, businesses convert those resources into goods and services.

What are the 4 factors of production?

In economics, there are four types of resources, known as factors of production. Each factor of production has a specific type of payment associated with it, which is called factor payment.

Labor: – They are workers. The factor payment for labor is called “wages”.

Land: – It includes land that is rented or purchased, as well as other components such as natural resources and raw materials. The factor payment for land is called “rent”.

Capital: – This money is used to purchase equipment that applies labor to convert land (i.e. natural resources) into goods. The factor payment for capital is called “interest”.

Entrepreneurs: – These are the people who put together the other three resources to build a successful business. For entrepreneurs the factor payment is called “profit”.

How do costs, revenue, and consumer spending relate to the circular flow model?

It is the simple circular flow model of the free market, money flows in the opposite direction.

Here’s how it works: –

When families need a good or service, their money goes to the product market in the process of consumer spending.

To provide goods and services to households, the product market buys from businesses, generating revenue.

To create goods and services for the product market, businesses purchase resources from the resource market, thereby generating costs.

Finally, to generate resources businesses need to make goods, the resource market pays for other resources namely workers and land. It generates income for labor and landholders.

The above process can be summarized as follows: –

Consumer spending —> Revenue —> Cost —> Income

Explanation:

Answer 2

Bro it will be True

Explanation:

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