Question

circular flow of income and how it is affected in 2020 and is the US economy will/will not grow more rapidly in the next three years than the last three years, discuss.

Answer 1

An economy is an endless cirlcular flow of money, where money moves through society.money flows from producers to workers as wages and flow back to producers as payment of product. usually circular flow of income is in five main sectors : HOUSEHOLDS ---- FIRMS ----- MARKET FOR FACTOR OF PRODUCTION ---- MARKET OF GOODS AND SERVICES ----GOVERNMENT. Money flows in the opposite direction from goods and services to factor of production.

Individuals invest in business and get income, business get labour and gives goods and services. this circular flow illustrates the independence of flow that occers in the economy, such as production of goods and services and income generates production. this shows equality between the income earned from production and the value of goods and services produced.

In 2020 coronavirus shocking impact on economy. production is hit because of lack of workers,due to this demand and suppy is effected. consumers and firms all around the world crouched in a wait and see mode. hoseholds,business,governments,the financial sector,and foreign entities all keep moving around the economy to each other,the covid-19 crices threatens this flow at numerous points.economy keeps running only when the money keeps flowing around the circuits, but the flow disruption anywhere has lead to slowdown everywhere.

circular flow of income is effected in 2020 be like:

: households that don't get paid may experience financial distress or even bankruptcy.

: the domestic demand hits the nations import and thus the flow of money to foreigners.

: drop in demand and supply shock has lead to a dispution in international and domestic supply chain.

: business are forced in bankruptcy.

: labour is a dispute layoffs, sick leaves,quarentines.

The essence of new pattern is now followed in US that's the change everyone can see. the rise of digital technology and growing volume of international investments and trade is totally new pattern and will lead to rise growth in economy much faster as used to.Global compitation means good growth in economy nd will not create high inflation. so US economy will grow more rapidly in next three years than last three years.