Circular Flow of Income in Two Sector Economy

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EagerPraseodymium
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In a two-sector economy, which loop of the circular flow of income represents the flow of factor services from households to firms?

Outer loop

What flows from firms to households in the circular flow of income in a two-sector economy?

Goods and services

How is the entire amount of money paid by firms as factor payments returned to the firms in a two-sector economy?

As consumption expenditure by households

Discover the concept of the circular flow of income in a two-sector economy, which highlights the interconnection between households and firms through the exchange of goods, services, and factors. Understand the flow of factor services and payments, as well as the flow of goods, services, and consumption expenditure.

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