2. Types of Flows :
Real Flow: Factors of production and the goods and services.
Money Flow: Monetary flows between different sectors.
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3. Circular-Flow of Economic
Activities:
A household is a person or a group of people that share
their income.
A firm is an organization that produces goods and services
for sale.
Firms sell goods and services that they produce to
households in markets for goods and services.
Firms buy the resources they need to produce—factors of
production—in factor markets.
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Total Exports by India : 2010-11->Rs. 9,00,471 CrTotal Imports by India: 2007-08->Rs. 949,133 Cr.Current Fiscal Deficit : 5.5% of GDP
Withdrawal(leakage) is generated in the production of national output, hence it is not a part of national output. Injection is the amount of money which is spent by different sectors in the economy which is in addition to the incomes generated in the circular flow of income.
Part of the flows from the households and from the firms goes to government in the form of taxes.Part of the tax revenue is spent by the govt as govt exp to provide services and transfer payments to the households. Part of the tax revenue is spent by the govt on purchase of goods and subsidies to the firms.
If exports are less than imports X< M, foreign trade deficit, Un favorable balance of trade Exports are greater than imports X>M, foreign trade surplus - favorable balance of trade.
