Two sector economy Cyclical flow national income
Discuss the cyclical flow of economic activity in a simple two-sector economy.
Or, What is the cyclical flow of national income? Write about two sectoral cyclical flows of national income.
Or, Write the cyclical flow of national income. Discuss in detail the two sectoral cyclical flows of national income.
Or, What about the cyclical flow of national income? Give details about two sectoral cyclical flows of national income.
Introduction: The word economics is believed to be derived from the Greek word Oikos, the union of two words Oikonomia with another word Nomos. The original meaning is the science of household management. Today the economy has expanded beyond the limits of home management. Economics is a social science that seeks to analyze human economic activities and solve problems. Economics reconciles the infinite scarcity of human beings and the alternative uses of finite resources. The definition of economy is considered in many ways and different economists have defined economy in different ways. Following are the definitions given by some economists:
According to classical economist Adam Smith (1776), the father of economics,
Concise Oxford Dictionary Economics
"The practical science of the production and distribution of wealth"
According to Professor Alfred Marshall,
"Economics, is a study of mankind in the ordinary business of life." That is, economics is a subject that deals with the daily life activities of people.
He gave the most important definition of economics Professor L. Rabil. In his famous book "An Essay on the Nature and Significance of Economics Science" while giving the definition of economics, he said that economics is A science that deals with the alternative use of limited resources and | reveals the relationship between the infinite scarcity of human beings.”
Robbins approximates the overall content of economics in his definitionThe whole has been highlighted. Hence his definition is more acceptable.
Cyclical Flows of National Income:
Modern Economics According to Janak Samuelson, “National income is a stream, This includes the flow and production of products Income Stream of Materials Employed."
The two main sectors of the economy are the household and the firm. Consumers and producers living in households are active in the two-way flow of the economy. First, inputs of production (land, labour, capital and organization) flow from the household to the firm through the market. This is called input flow. Again the goods produced in the farm flow to the family through the market. This is called output flow.
Households receive money from the firm in the form of rent, wages, interest and profits in exchange for input flows. This is called income flow. Again the family buys the goods produced in the farm with the money received from the farm. This is called expenditure flow. The sum of money received by households in the form of rent, wages, interest and profits is called national income. Again, families like this Income flows into the firm through consumption expenditure (C) and investment expenditure. In this case, the sum of consumption expenditure and investment expenditure of households is also called national income.
Thus in exchange for material flow and production flow National income through income flow and expenditure flow respectively Flows from farm to family and from family to firm. National income with the help of materials market and product market This flow from farm to family, from family to firm Circular flow of national income is called circular flow of national income.