What are the different phases of a circular flow of income

Question 2. What are the different phases of a circular flow of income?
Class  Class 12
Subject Economics (Macroeconomics)
Category Class 12 Economics Solutions Sandeep Garg

Q.2 What are the different phases of a circular flow of income?

Solution:-

  • Production Phase/Generation Phase: In this phase, firms produce goods and services with help of factors of production. For example: production of yarn from cotton in a textile industry with the help of labor and machines
  • Income Phase/Distribution Phase: In this phase, factor income is transferred from firms to households. For example: payment of wages to the labors for their factor service.
  • Expenditure Phase/Disposition Phase: In this phase, income received is spent on goods and services produced by firms. For example: expenditure by the households to meet the daily requirements.




Short Questions – Sandeep Garg Macroeconomics Class 12 Solutions Circular Flow of Income

Sandeep Garg Macroeconomics Class 12 Solutions

Part A: Introductory Macroeconomics
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