In a two sector model there is no government control. There are
just two sectors (1) the households (2) the firms. No government
control means there would be no taxes, no subsidies and no social
security. Also Economy will be a closed one meaning NO TRADE. House
hold will supply factors of production to firms and will receive
income in against them and thus they will use these incomes to buy
what ever has been produced by firms. Where as firms will hire
factors of productions and will pay house holds and will produce
goods and service which are to be used by house holds and thus will
receive income in against them
NOTE: One sector's expenditure is another sector's income.