Question

relationship between economic system and natural system based on
1 circular flow model
2 material balance model

Answer 1

1.The circular flow of income model is an economic model which states that major exchanges are represented as the flow of money, goods, services etc between the agents in the economy. Here, the households, firm, government and financial markets re linked together by the circular flow of material supply of goods and services. The natural system lso has a circular flow in which the energy keepa circulating as in this economoc model. Thus, there is a natural flow of the goods and services which gives the link between thenatural and the economic system.

2. In the material balance modeling, the material supplies are being considered to balance the input and the output instead of taking the monetary value of rgw supplies. Here, the inputs and the raw materials are being surveyed and the balancing is done by taking the supply and demand in to consideration. It encompasses non-labour inputs where the distribution of consumer goods and the allocation of labour is being left to the market mechanism. Thus, here we can see that in the natural system also the mass woukd always remain the same and there is always a supply and food chain in which there is flow if mass and it is being considered while making the energy balancing in the natural system. Thus, we can see an established relation between the economic and natural aystem in the material balancing model also.