Households and firms depend on each other in the circular flow of income.justify the statement in case of two sector model

Dear Student

Households and firms depend on each other in the circular flow of income. Households provides factors of production to firms i.e. Land, labour, Capital, Entrepreneur. In return firms provide factors  of payments Rent, Wages, Interst, and Profit. Firms Provide goods and services to households and in return household spends money expenditure.
Diagram to explain two sectr model is:-

Image result for Households and firms depend on each other in the circular flow of income.justify the statement in case of two sector model

Regards
 

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