Question

circular flow of income in three sector economy ​

Answer 1

Answer:

Circular Flow of Income in a Three-sector Economy. ... Household sector provides the factors of the production such as land, labour and capital and enterprise that the producers require to produce goods and services. They also receive payments as in rent, wages, interest and profits from the business sector.

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Answer 2

In Macroeconomics,the three sector economy consists of three main economic sectors:household sector,business sector and government sector.It depicts the flow of goods and services between these three sectors.

Explanation:

First,the household sector basically comprises of individuals or consumers who are the main provides of factors/inputs of production such as land,labor,capital inputs etc to businesses for production purposes.In exchange the household sector receives income,interest payments,wages,profits etc. from the business sector.

Secondly,the business sector consists of the producers,firms and business organizations for producing all the goods and services in the economy.They are the producers and sellers of goods and services to the household sector.Household sector consists of individual consumers who purchase goods and services from the business in return,pay them the price which is the main source of revenue or income for the business sector.

Finally,the government implements various public sector and developmental projects which are financed by the tax money collected from both the household(income tax,sales tax etc) and business sectors(profit/corporate tax).Hence,the tax money from both household and business sectors are injected into the circular flow model through the overall government expenditure on the economy.