Circular flow of income
What Circular flow of income means in Economics GCSE, as defined for AQA.
Definitions of Circular flow of income
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Reference: AQA
A continuous flow within the economy, created because income earned by households in factor markets dictates their purchasing power in product markets.
The way a single transaction links consumers, producers and the government as money and resources flow between the three groups.
Topics that use Circular flow of income
- Economic activity (AQA GCSE)
- Markets and allocation of resources (AQA GCSE)
Related terms
- Resource allocation
- Basic economic problem
- Consumers
- Distribution of wealth and income
- Economic agents
- Economic welfare
- Efficiency and resource allocation
- Factor market
Using Circular flow of income in the exam
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