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Message: <blockquote data-quote="Mal Aiyya" data-source="post: 4741085" data-attributes="member: 81650">Ok...... to start with, there is a concept called the Two-sector model in the economy, which is a closed one. It consists of only Households and Firms In economics, the term circular flow of income or circular flow refers to a simple economic model which describes the reciprocal circulation of income between producers and consumers. In the circular flow model, the inter-dependent entities of producer and consumer are referred to as "firms" and "households" respectively and provide each other with factors in order to facilitate the flow of income. Firms provide consumers with goods and services in exchange for consumer expenditure and "factors of production" from households.</blockquote>

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