Circular flow
Circular Flow
unaffected (uncertain) by inflation:
1. ARM Adjustable Rate Mortgage
2. Salary ;pension (retirement) ;social security that receives COLA cost of living adjustment
nominal interest rate: unadjusted cost of borrowing or lending money
real interest rate: cost of borrowing or lending money which is adjusted for inflation
formula= nominal interest rate-inflation
The transfer of income and labor is not purely from businesses to individuals but also from factor and product markets.
ReplyDeleteI love that you decided to insert a diagram to give a visual example, but make sure that it has all the components such as household, firms, both factor and product markets, and also government in the middle. Further explanation of each component on the diagram would also be super helpful!
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