Categories: All - income - spending - equilibrium - injection

by Siti Noreen 6 years ago

1731

Circular flow of income in two three and four sector economies

The circular flow of income illustrates the movement of money between different sectors of an economy. In a two-sector economy, comprised of households and firms, households spend their entire income on consumption, and any savings represent a leakage.

Circular flow of income in two three and four sector economies

Circular flow of income in two three and four sector economies

Circular flow of Income in a Four - sector Economy

leakage equal injection equation : I t G t X = S t T tM
Y = C t I t G t X - M
For exports,country receives payment from abroad .While imports are payment made for purchase the goods and service to foreigners.So,import is a leakage.
There is now export and import

Circular flow of Income in a Three - sector Economy

Circular flow of Income in a Two-sector Economy