Chapter 2, Problem 8P

To determine

how the cash is circulated in an education institute

Concept Introduction:

Circular flow Diagram:

• It is a diagram that shows transaction within the economy as the flow of factors of income and the goods and services produced.
• It has two circular flows. The one is of income flow and other is of goods and services flow. It is important to understand how spending, income and growth are interlinked in an economy.
• Factor payments like rent wages and profits determine the income distribution of an economy. It helps in determining how the income is allocated to the factor of payment’s owner.