Question:
Which one of the following is included in circular flow?
Which one of the following is included in circular flow?
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The circular flow has two parts: the flow of actual stuff (Real Flow) and the flow of the money that pays for the stuff (Monetary Flow).
Updated On: Sep 12, 2025
- Real flow
- Monetary flow
- Both (A) and (B)
- None of these
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The Correct Option is C
Solution and Explanation
The circular flow of income is a model that shows the connections between different sectors of an economy. It consists of two main flows that move in opposite directions:
Real Flow: The flow of factors of production (land, labor, capital) from households to firms, and the flow of goods and services from firms to households.
Monetary Flow (or Money Flow): The flow of factor payments (rent, wages, interest) from firms to households, and the flow of consumption expenditure from households to firms.
The complete model includes both these flows.
Real Flow: The flow of factors of production (land, labor, capital) from households to firms, and the flow of goods and services from firms to households.
Monetary Flow (or Money Flow): The flow of factor payments (rent, wages, interest) from firms to households, and the flow of consumption expenditure from households to firms.
The complete model includes both these flows.
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