The circular flow means the unending flow of production of goods and services, income, and expenditure in an economy. It shows the redistribution of income in a circular manner between the production unit and households. Grade 12 Economics Circular Flow Self-Study Guide
These are land, labour, capital, and entrepreneurship.
- The payment for the contribution made by fixed natural resources (called land) is known as rent.
- The payment for the contribution made by a human worker is known as wage.
- The payment for the contribution made by capital is known as interest.
- The payment for the contribution made by entrepreneurship is known as profit.