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The Circular Flow of IncomeThe five-sector circular flow model describes the outgrowth of the prudence and the linkages between the main sectors in the economy. The five-sector model is ground on dividing the economy into five sectors. A sector whitethorn be defined as a part of the economy where the participants are diligent in a similar lawsuit of economic activity.1. Individuals2. Businesses3. Financial institutions4. Government5. International Trade[pic]Individuals    This sector consists of all individuals in the economy.    These individuals are the owners of productive resources, and the consumers in our economy.    Individuals supply factors of production (inputs) such as fag out and enterprise to parentagees, which they use to go goods and services. As a reward for supply resources such as labour and enterprise to firms, individuals receive incomes \  rent, wages, interest and profit.Businesses    This sector consists of all the business firms engaged in the production and distribution of goods and services (apart from pecuniary services).    It concerns all their activities affect with buying factors of production and using them to produce and sell goods and services.    Individuals and businesses are interdependent.

Financial Institutions    This sector consists of all those institutions that are engaged in the borrowing and lending of money, acting as the intermediaries between those who save, and borrowers of money.    Financial institutions are needed for individuals and firms to be able to meet saving and investment. They perform the function of mobilising savings for investment.    Savings: dodging; Investment: injectionGovernment    In India, this sector consists of the Central, State and local governments.    It is involved in the satisfaction of collection (community) deprivations.    It obtains the resources to do this through luxurious taxes on the other sectors of the economy.    It uses this tax revenue to undertake various... If you want to get a full essay, order it on our website: Orderessay

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