scroll to top
Stuck on your essay?
Get ideas from this essay and see how your work stacks up
Word Count: 754
Five Sector Circular Flow of Income The five sector circular flow of income shows the distribution of income within the economy It has five main subsidiaries or contributors including individuals businesses financial institutions the government and international trade and financial flow Each of these sectors contribute to either the leakages or injections or both of the circular flow of income Individuals refers to all members of the economy regardless of employment or financial status They are concerned with the activities of earning an income and spending on goods and services They are consumers as well as the owners of productive resources This means individuals supply factors of production such as labour and enterprise and for this they are rewarded by businesses with wages rent royalties and other forms of income This income is then spent on locally manufactured goods and services imports taxes and savings The business sector includes all business firms involved in the production of goods and services It does not include financial services Businesses deal with all activities involved in buying factors of production and using them to produce goods and services They depend on individuals for both the supply of resources needed for production and the consumption of goods and services produced Individuals require businesses to provide goods and services and income This interdependence is essential to the circular flow of income Businesses form the private sector of our economy The financial institutions sect relates to all institutions involved in borrowing and lending money They are the median between borrowers and lenders of money Some financial institutions include banks building societies life insurance companies and Superannuation They are needed by establishments and firms to undertake savings and investment Financial Intermediariefs accept deposits or savings from individuals and lend to businesses for investment purposes thereby mobilising savings This is also known as the capital market Savings are considered to be leakages in the
@Kibin is a lifesaver for my essay right now!!
- Sandra Slivka, student @ UC Berkeley
Wow, this is the best essay help I've ever received!
- Camvu Pham, student @ U of M
If I'd known about @Kibin in college, I would have gotten much more sleep
- Jen Soust, alumni @ UCLA