ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Business Cycle
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Circular Flow
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Monopolistic Gerrymandering
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Invisible Hand
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Detailed explanation-1: -The circular flow model shows the interaction between two groups of economic decision-makers-households and businesses-and two types of economic markets-the market for resources and the market for goods and services.
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 demonstrates how money moves through society. Money flows from producers to workers as wages and flows back to producers as payment for products. In short, an economy is an endless circular flow of money.