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Difference between real flow and money …

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Difference between real flow and money flow of income

    • Posted by Yaser Siddiquee 6 years, 7 months ago

    CBSE > Class 12 > Economics
    • 1 answers

    Yogita Ingle 6 years, 7 months ago

    Real flow Money flow
    Flow of factor services from the household sector to the firms and the corresponding flow of goods and services from the firms to the households is called the real flow When the households provide factor services to the firms, in return they receive factor payments.
                The factor payments received by the household is then spent on goods and services produced by the firms leading to a circular flow of money between households and firms.
    Real flow does not have a common medium of exchange. Hence, it has limitations of barter system. All transactions are settled with the help of money as a common medium of exchange. Hence, it overcomes the limitations of barter system.

     

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