Discuss briefly, the circular flow of income in a two sector economy with the help of a suitable diagram.
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The circular flow model of income in a two-sector economy states that the economy has two sectors and they are the household and the business.
The process initiates with a flow of the economic losses from the household sector of the economy to the enterprises for producing and flowing funds to households in for of incomes.
Money is spent on houses for consumption. The expenses of households are a monetary gain for business sectors.
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