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Why are money flows are opposite …

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Why are money flows are opposite from real flows????

Posted by Jahanvi Gupta 7 years, 8 months ago

CBSE > Class 12 > Economics

1 answers

Jaisy Jeji 4 years, 11 months ago

money flows are opposite to real flows. Because money flow are in response to 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 make payments to the producers. So that, money flows from the households to producers in terms of consumption expenditure. Likewise, there is a real flow of factor services from the households to the producers. It is in response to it, that the producers make payments to the households. So that, money flows from producers to the households in terms of factor payments.

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