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Question
What Is Meant by Circular Flow of Income?
What Is Meant by Circular Flow of Income?
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Solution
Circular flow of income is referred to as the process by which money moves in the society. It can be understood with the following example.
Money flows from producer to workers (employees) in the form of salary or wages and the money flows back to producers as payments received for the products. In this way, money flows in a circular fashion in an economy.
This is referred to in economics as a circular flow of income model.
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Circular flow of income is referred to as the process by which money moves in the society. It can be understood with the following example.
Money flows from producer to workers (employees) in the form of salary or wages and the money flows back to producers as payments received for the products. In this way, money flows in a circular fashion in an economy.
This is referred to in economics as a circular flow of income model.
Also read:
Stay connected to BYJU’S for more such questions and answers.
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