Q.
a) The circular flow of income shows the economic interaction between the different sectors in the economy. It also involves the income received and income payments made by different sectors to the economy.
Explain with diagram the circular flow model in a two-sector economy. (15 marks)
b) Explain the characteristics of money as a medium of exchange. (5 marks)
(20 marks, 2013 Q6)
A.
a) Similar question was asked in
2011 Q7 Circular Flow of Income.
b) Characteristics of money as a medium of exchange refer here. Previous posts were on types and functions of money. Characteristics of money is about durability, divisibility, transportability and noncounterfeitability.
Ref:
See their respective posts.