Essay circular flow

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The circular flow of income or circular flow is a model of the economy in which the major exchanges are represented as flows of money , goods and services , etc. The flows of money and goods exchanged in a closed circuit correspond in value, but run in the opposite direction. The circular flow analysis is the basis of national accounts and hence of macroeconomics. The idea of the circular flow was already present in the work of Richard Cantillon. Richard Stone further developed the concept for the United Nations UN and the Organisation for Economic Co-operation and Development to the system, which is now used internationally.
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Circular Flow - Macro Economics

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Circular Flow Model: [Essay Example], words GradesFixer

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Macroeconomics: Circular Flow of Economics

Some income is saved and saving represents leakage from the circular flow of income because its part of the income paid out by firms which does not return to them through spending of households. So if Gov. Leakages determine size of multiplier.
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What is the four sector circular flow model? A circular flow of income is a four-sector economy which includes households, firms, government and foreign sector. The circular flow of income indicates connections between various areas of our economic system. It revolves around flows of goods and services and factors of production between firms and households.
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