ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -People in households buy goods and services from businesses in an attempt to satisfy their unlimited needs and wants. Households also sell their labor, land, and capital in exchange for income that they use to buy goods and services that firms produce.

Detailed explanation-2: -Key Takeaways. The circular flow model demonstrates how money moves from producers to households and back again in an endless loop. In an economy, money moves from producers to workers as wages and then back from workers to producers as workers spend money on products and services.

Detailed explanation-3: -So, in the market for resources, households sell resources and businesses buy resources. The resources flow one way (counter-clockwise) and money flows the other (clockwise). At this point in the cycle, households sell resources to businesses.

Detailed explanation-4: -Households give land, labor, and capital to firms, and households receive wages and profits from firms in return. products and money used to produce goods and services.