Describe the Circular Flow of Income
On the sellers side money payments go to factor owners in the form of rent wages etc. These four parts consumption expenditures gross domestic product factor payments and national income are the core of the circular flow. Understanding The Circular Flow Of Income And Tutor2u Economics Circular Flow Of Income Economics Economics Lessons Firms use these factors to produce goods and services which they sell to the households. . They are the engine that drives the macroeconomy. This circulation happens in terms of income in the production process distribution between the factors of production and at the end the circulation of the product from household to a firm in the form of consumption expenditure on goods and services manufactured by them. In an economy households provide factors of production such as labour to firms. So there has been the flow of money from households to producers as payments for the purchase. Income goin...