What is a circular flow diagram and what does it demonstrate?
A circular flow diagram represents how goods, services, and money move through our economy. Households then offer land, labor, and capital (known as factors) to firms so that they can then produce the goods and services. Households also offer the firms their money in the form of spending when they purchase goods.
What does the circular flow model attempt to explain?
The circular flow of income or circular flow is a model of the economy in which the major exchanges are represented as flows of money, goods and services, etc. between economic agents. The flows of money and goods exchanged in a closed circuit correspond in value, but run in the opposite direction.
How does the circular flow diagram work?
The circular flow diagram illustrates the equivalence of the income approach and expenditures approach to calculating national income. In this diagram, goods, services, and resources move clockwise, and money (income from the sale of the goods, services, and resources) moves counterclockwise.
What is the major lesson of the circular flow diagram?
The Major Lesson Of The Circular Flow Diagram Is That One Person’s Expenditure Is Someone Else’s Receipt. The Total Demand For Goods And Services In An Economy Is Known As National Demand.
What is the function of households in the circular flow?
Households supply factor services to the firm and spend their entire income on the consumption of goods and services produced by the firms.
Which is the main function of household sector?
3.1 The Household Sector The primary function of this sector is to provide the factors of production. The factors of production include land, labour, capital and enterprise. The household sectors are the consumers who consume the goods and services produced by the firms and in return make payments for the same.
What are the three phases of circular flow of income and product what type of information do they reveal?
They are: ⭐PRODUCTION PHASE:in this phase firms produce goods and service with the help of factor services. ⭐INCOME PHASE:this phase involves the flow of income from firms to households. ⭐EXPENDITURE PHASE :the income received by factors of production is spent on goods and services produced by firms.
Which of the following is the phases of circular flow of income?
Generation phase, Distribution phase and Disposition phase are the phase of circular flow of income.
What is the importance of circular flow of income?
The circular flow helps in calculating national income on the basis of the flow of funds accounts. The flow of funds accounts are concerned with all transactions in the economy that are accomplished by money transfers.
Which of the following is an example of flow variable?
National income, investment in the economy and aggregate supply- all are flow variables since they relate to a period of time.
Is real flow nominal flow?
Real flow is also known as nominal flow.
What is meant by circular flow of income distinguish between real flow and money flow?
It refers to the flow of goods and services across different sectors of the economy. It refers to the flow of money in terms of receipts and payments across different sectors of the economy. Circular flow of income: It refers to unbroken circularity of real flows and money flows across different sectors of the economy.
What is nominal flow rate mean?
Nominal flow rate measures the volume of liquid passing through a system under specific pressure conditions. Depending on region, the nominal flow rate may be measured in gallons per minute, or GPM, or liters per minute, or LPM.
What is normal flow rate?
Normal flow rate is 1 atmosphere (101.3 kPa) or 14.696 psia at 32 0F (0 0C). Actual flow rate is the actual volume of fluid that passes a given point based on given pressure and temperature of the process.
What is normal flow rate of urine?
Typically, urine flow runs from 10 ml to 21 ml per second. Women range closer to 15 ml to 18 ml per second. A slow or low flow rate may mean there is an obstruction at the bladder neck or in the urethra, an enlarged prostate, or a weak bladder.
What is the normal flow rate of oxygen?
The normal flow rate of oxygen is usually six to 10 litres per minute and provides a concentration of oxygen between 40-60%.