Money Flow and Real Flow.

Q7. What is money flow and real flow?

Ans.

Money Flow – Monetary flow refers to the flow of factor income like rent, interest, profit and wagesfrom the producing sector to the household sector as monetary rewards for their factor services. The household spend their incomes on the goods and servicesproduced by producing sector. Accordingly, money flow back to the producing sector ashousehold expenditure.

Real Flow – Real flow of income implies the flow of factor services from thehousehold sector to the producing sector and the corresponding flow of goods & servicesfrom the producing ┬ásector to the household sector.

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