Question

Distinguish between real flows and money flows.

Distinguish between money flow of income and real flow of income.

Differentiate between Real flow and Money flow.

Answer 1

Sr. No.	Basis	Real flows	Money flows
1.	Meaning	Flow of goods and services and factor inputs.	Flow of money income and payments.
2.	Nature	Physical / actual movement of goods and services.	Monetary / financial transactions.
3.	Purpose	Production and consumption.	Facilitates real transactions.
4.	Direction	From households to firms (factor services) and firms to households (goods/services).	From firms to households (income) and households to firms (expenditure).
5.	Examples	Labor, land, machinery, a1nd finished goods.	Wages, rent, interest, profit, and payments for goods.

Answer 2

Basis	Real flow of income	Money flow of income
Meaning	This is the flow of goods and services between firms and households.	This is the flow of money between firms and households.
Type of exchange	It clearly involves the exchange of goods and services.	It clearly involves the exchange of money.
Alternative Name	This is also known as physical flow.	This is also known as nominal flow.