What is he circular flow of transaction in microeconomics?

Answer 1

The circular flow of transactions in microeconomics is a model that illustrates how money and resources move between households and businesses within an economy. In this model, households provide factors of production, such as labor, to businesses in exchange for wages, while businesses produce goods and services that households purchase. This continuous exchange creates a flow of income and expenditure, demonstrating the interdependence of different economic agents. Overall, the circular flow helps to understand the dynamics of economic activity and the relationship between consumption and production.