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Why does circular flow of money never stop?

Posted by Sneha Jaiswal 1 month, 1 week ago

CBSE > Class 12 > Economics

1 answers

Sneha Jaiswal 1 month, 1 week ago

Circular flow of money refers to the unending flow of money in an economy basically consists of production phase, distribution phase , and expenditure phase. Every and each activity is the cause of another activity.for instance household will always demand goods and services for satisfaction of their wants this will force producers to produce them and again for production producers will demand factor services and again in return household will get factor payments for rendering their services and this will make them able to buy goods and services and this will lead to opening of expenditure phase and this vicious circle never ends.

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