Quick Answer: What Is Meant By Real Flow Or Physical Flow?

What are the three phases of circular flow of income?

There are three different phases in circular flow of national income, viz.

production, income and expenditure.

They represent three related aspects, namely, production (i.e., generation of income), distribution (of income) and disposition (of income, i.e., expenditure)..

Which is not called factor of income?

Gifts from abroad are a type of transfer payments which do not create any additional output or income in the economy, hence, they are not a type of factor income. How satisfied are you with the answer?

What are the two basic principles of circular flow of income?

The circular flow of income involves two basic principles: (ii) Goods and services flow in one direction and the money payment to acquire them, flow in the return direction giving rise to a circular flow.

What is meant by physical flow?

PHYSICAL FLOW: … The physical flow, the physical movement of goods and services, is the foundation of the circular flow model. The fundamental problem of scarcity is addressed by physically transforming scarce resources into goods and services that are then used to satisfy wants and needs.

How income is a flow?

The circular flow of income is a way of representing the flows of money between the two main groups in society – producers (firms) and consumers (households). … On the scale of the whole economy, this is known as national income – the total amount of income earned over a given time period.

Which of the following is a phase of circular flow of income?

Generation phase, Distribution phase and Disposition phase are the phase of circular flow of income.

How do goods/services flow through the economy?

Goods and services flow through the economy in one direction while money flows in the opposite direction. … Businesses sell goods and services to households, earning revenue and generating profits. Businesses also pay wages, interest and profits to households in return for the use of their factors of production.

Why is money flow opposite to real flow?

Because money flow are in response to the real flows. Example-There is a real flow of goods and services from the producers to the households. It is in response to it that the households makes payments to the producers.

What is mean by real flow?

Real flows refer to the flow of the actual goods or services, while money flows refer to the payments for the services (wages, for example) or consumption payments.

Why income flow is called circular flow?

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.

What is real national income?

Real national income is nominal or money national income (output) adjusted for inflation. It is also national income at ‘at constant prices. The most frequently used measure of national income is Gross Domestic Product (GDP).

What is known as nominal flow?

The household spends their income on the goods and services produced by producing sector. This flow is known as nominal flow (money flow). Regards.

What is the other name of real flow?

Circular flow of money is of two types — real flow and monetary flow. Simply flow of goods and services is called real flow and flow of money (income) is called money flow.

What are the two types of circular flow?

The two types of circular flows are: (i) Real flow (ii) money flow.

What is difference between stock and flow?

A stock is measured at one specific time, and represents a quantity existing at that point in time (say, December 31, 2004), which may have accumulated in the past. A flow variable is measured over an interval of time. Therefore, a flow would be measured per unit of time (say a year).

What is real flow class12?

(i) Real flow: The flow of factor services from households to business and flow of goods and services from business to households is known as real flow. … i.e. exchange of factor services by the household for factor payments from firms.