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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.
Wiki User
∙ 13y ago
Wiki User
∙ 13y agoPublic and private.
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real flow of economics activities
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How is the term business sector used in economics?
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Realflow vs moneyflow in a two sector circular flow model?
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What has the author Juan Braun Ll written?
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What are the two sectors model economy?
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How is the term business sector used in economics?
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Micro influence in economics, micro economics actually, is a term which stands for influence or affect on the market sector which causes problems/benefits.
What are the different area of economics?
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