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प्रश्न
State the equilibrium condition of circular flow in a two-sector economy.
लघु उत्तर
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उत्तर
In a two-sector economy (comprising only households and firms, with no government or foreign trade), the equilibrium condition is S = I.
Where:
S = Savings by households
I = Investment by firms
Equilibrium occurs when households' total savings (S) equal enterprises' investment expenditure (I). This ensures that every income generated is spent or invested, resulting in a consistent circular flow of income.
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