wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

Explain the circular flow of income.

Open in App
Solution


The Circular flow of income can be better understood with help of following diagram:
Incomes are first generated in production units due to the joint efforts of factor owners from household. These incomes are distributed to the factor owner who in turn spend the income on purchasing goods and services produced in production units. This makes the circular flow of income complete.


flag
Suggest Corrections
thumbs-up
2
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
The Supply Shifters
ECONOMICS
Watch in App
Join BYJU'S Learning Program
CrossIcon