Explain the circular flow of income.


The circular flow of income refers to the flow of money or the flow of goods and services across the different sectors of an economy in a different form.
Three phases of circular flow are- 
Phase of production : it means the production of goods and services by the producers' sector. 
Phase of distribution : it corresponds to the flow of income in terms of rent, interest, profit, and wages from the producer sector to the household sector and 
Phase of deposition : it refers to the expenditure on the purchase of goods and services by the households and the other sectors.  

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