Circular flow of an economy of Zambia
The circular flow of an economy in Zambia follows a similar pattern to the traditional model of a market economy. In this model, there are two main sectors – the household sector and the business sector.
The household sector consists of individuals and families who own and consume goods and services. They receive income from the business sector in the form of wages, salaries, and profits, which they then use to purchase goods and services produced by businesses.
The business sector consists of firms and producers who produce goods and services to sell to households. They hire workers from the household sector and pay them wages in exchange for their labor. The business sector also receives revenue from the sale of goods and services, which they then use to pay for factors of production such as labor, land, and capital.
In the circular flow model, there are two main flows of money and goods and services. The first flow is from the business sector to the household sector in the form of wages, salaries, and profits. The second flow is from the household sector to the business sector in the form of consumption expenditure.
There are also flows of goods and services in the circular flow model. Businesses produce goods and services, which are then purchased by households. In exchange for these goods and services, households provide factors of production such as labor and land to the business sector.
Overall, the circular flow of the economy in Zambia demonstrates how income and goods and services flow between the household and business sectors, creating a continuous cycle of production and consumption.