Answer to Question #144776 in Political Science for Terry

Question

Three major flows in any economy are?

Answer 1

In political economics, an economic system entails resource allocation, as we as the production and distribution of goods and services within a geographical area or a society. The system comprises various institutions, agencies, entities, decision-making processes and consumption patterns. Production and consumption are interested and explained in three major flows. The circular flow in a two-sector economy occurs in a simplified economy comprising households or consumers and business firms. The circular flow in a three-sector economy entails households/consumers, firms and government. The government introduces taxes and public expenditure in this economic system. Thirdly, the circular flow in a four-sector economy includes housedolds/consumers, business firms, government and exports. Foreign trade plays a fundamental role in this economic system.