In a circular flow diagram what flows from household to businesses
In a circular flow diagram, the flow from households to businesses includes:
1. Money or income: Households provide money or income to businesses through purchases of goods and services. This flow represents the expenditure of households on products and services produced by businesses.
2. Resources or factors of production: Households provide businesses with the necessary resources or factors of production, such as labor, land, and capital. These inputs are used by businesses to produce goods and services.
3. Labor services: Households supply labor to businesses by engaging in employment. This flow represents the physical and mental effort exerted by individuals in the production process.
4. Savings or investments: Households may also provide financial resources to businesses through savings or investments. This flow represents the funds that households allocate for businesses to use in various investment projects or to finance their operations.
Overall, these flows from households to businesses contribute to the production and economic activities of businesses in the circular flow of the economy.