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Explain the three phases of the circular flow of income. |
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Answer» The three different phases in the circular flow of income are- Generation Phase- In this phase, the firm manufactures the goods and services with the assistance of factor services. Distribution Phase- This phase involves the flow of factor income, which comprises of rent, interests, wages, and profit from firm to the household. Disposition Phase- Here, the income collected by the factors of production, is used on the goods and services manufactured by a firm. |
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