Question

What does the following diagram represent?

• A. Real Flow
• B. Money Flow
• C. Nominal Flow
• D. Both b and c

Answer 1

The correct option is D Both b and c

Diagram represents Money Flow and Nominal flow.

Money flow refers to the flow of money in terms of receipts and payments across different sectors of the economy. Flow of factor payments by producer sector to the household sector or flow of money from household sector to producer sector on account of the purchase of goods and services for consumption are examples of money flows.

Nominal flow is referred as money flow in economics.