Class 12th Important Questions (Circular Flow of Income)

1. What is the circular flow of income and expenditure?

2. What are the main components of the circular flow model?

3. Explain the role of households in the circular flow.

4. Describe the function of firms in the circular flow.

5. What is the government's role in the circular flow model?

6. How does the foreign sector interact in the circular flow?

7. Explain the flow of money in the circular flow model.

8. What is leakage in the circular flow model?

9. What is injection in the circular flow model?

10. How does the circular flow model illustrate macroeconomic equilibrium?

11. What happens if leakages exceed injections in the circular flow?

12. Why is the circular flow of income a simplified model?

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