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Commerce Exam  >  Commerce Questions  >  Money flow is the flow ofa)Factor paymentsb)S... Start Learning for Free
Money flow is the flow of
  • a)
    Factor payments
  • b)
    Services only
  • c)
    Goods only
  • d)
    Goods and services only
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
Money flow is the flow ofa)Factor paymentsb)Services onlyc)Goods onlyd...
Former flow happens in factor market while latter flow happens in goods market. Money flow refers to the flow of factor payments from firms to households and payment for goods and services by households to firms.
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Community Answer
Money flow is the flow ofa)Factor paymentsb)Services onlyc)Goods onlyd...
Inflow and Outflow of Money is called Money Flow. It includes factor payment and factor receipt.
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Direction: Read the below case and answer the questions that follow:Circular Income Flow in a Two Sector Economy: In the figure given we can see that upper loop shows the resources such as land, capital and entrepreneurial ability flow from households to firms in the direction shown by the arrow direction.The money flows from firms to the households as factor payments in the form of wages, rent, interest and profits, shown by the arrow direction.The lower part of the figure shows the flow of money from households to firms in the form of consumption expenditure done by the households to purchase the goods and services produced by the firms, making the flow of goods and services from firms to households.Thus, we see that money flows from business firms to households as factor payments and then it flows from households to firms. Thus, there is, in fact, a circular flow of money or income. This is how the economy functions.Which of the following is not an assumption of a two sector model of Circular Flow of Income?

Direction: Read the below case and answer the questions that follow:Circular Income Flow in a Two Sector Economy: In the figure given we can see that upper loop shows the resources such as land, capital and entrepreneurial ability flow from households to firms in the direction shown by the arrow direction.The money flows from firms to the households as factor payments in the form of wages, rent, interest and profits, shown by the arrow direction.The lower part of the figure shows the flow of money from households to firms in the form of consumption expenditure done by the households to purchase the goods and services produced by the firms, making the flow of goods and services from firms to households.Thus, we see that money flows from business firms to households as factor payments and then it flows from households to firms. Thus, there is, in fact, a circular flow of money or income. This is how the economy functions.Money Flows from __________ to ____________ as factor payments.

Direction: Read the below case and answer the questions that follow:Circular Income Flow in a Two Sector Economy: In the figure given we can see that upper loop shows the resources such as land, capital and entrepreneurial ability flow from households to firms in the direction shown by the arrow direction.The money flows from firms to the households as factor payments in the form of wages, rent, interest and profits, shown by the arrow direction.The lower part of the figure shows the flow of money from households to firms in the form of consumption expenditure done by the households to purchase the goods and services produced by the firms, making the flow of goods and services from firms to households.Thus, we see that money flows from business firms to households as factor payments and then it flows from households to firms. Thus, there is, in fact, a circular flow of money or income. This is how the economy functions.Which of the following is not the significance of Circular Flow of Income?

Direction: Read the below case and answer the questions that follow:Circular Income Flow in a Two Sector Economy: In the figure given we can see that upper loop shows the resources such as land, capital and entrepreneurial ability flow from households to firms in the direction shown by the arrow direction.The money flows from firms to the households as factor payments in the form of wages, rent, interest and profits, shown by the arrow direction.The lower part of the figure shows the flow of money from households to firms in the form of consumption expenditure done by the households to purchase the goods and services produced by the firms, making the flow of goods and services from firms to households.Thus, we see that money flows from business firms to households as factor payments and then it flows from households to firms. Thus, there is, in fact, a circular flow of money or income. This is how the economy functions.Circular flow of income refers to the flow of activities of production, income generation and expenditure involving different ___________ of the economy.

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Money flow is the flow ofa)Factor paymentsb)Services onlyc)Goods onlyd)Goods and services onlyCorrect answer is option 'A'. Can you explain this answer?
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