BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -One of the most useful is the circular flow model. The circular flow model highlights the “flows” within the economy-the flow of economic resources, goods and services, and the flow of money.

Detailed explanation-2: -Increase in demand for labour (factor market) leads to increased demand for products. If firms employ more workers and pay higher wages then this leads to an increase in household income. This enables them to purchase more goods and services. It represents a circular flow of income.

Detailed explanation-3: -The circular flow model is an economic model that presents how money, goods, and services move between sectors in an economic system. The flows of money between the sectors are also tracked to measure a country’s national income or GDP, so the model is also known as the circular flow of income.

Detailed explanation-4: -The factors of production include land, labor, capital and entrepreneurship. The prices that correspond to these factors of production are rent, wages and profit. People in households buy goods and services from businesses in an attempt to satisfy their unlimited needs and wants.