Circular Flow – Circulation of Goods Homework Help

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Synopsis of Macroeconomics and Circular flow

Macroeconomics studied overall decision
That which is made in any economy with all behavioural impacts of individual households and business firms. It deals with average income consumption of all that is invested and also price levels. It is basically affected by various factors of rate of interests, rate of exchanges and inflation along with unemployment. It reflects the success of an economy as well as gives proper space to avoid worst of crisis in economy. It has variables like total output and income, price level and employments, etc.

Circular flow Model
Shows the continuous flow of income between all consumers and all producers. It has identities named as Firms and Households, through which an income factor facilitates. But all things happen only when there is a proper flow of goods/ raw material/ resources in between these sectors.

Circulation of goods
Only with proper and adequate circulation of goods can these sectors of an economy function normally. And this will in turn help in stabilized and advanced growth of overall economy that is needed for a country to progress overall. All payments of goods will continue to flow, till households continue its consumption and firms continue its production.
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