If the income flows from producer sector to the household sector, which phase is this?
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: Phase of distribution
In the circular flow of income model, the phase of distribution involves the distribution of income generated by production to factors of production, including households. This phase encompasses the payment of wages, rents, interests, and profits to households for their contributions to the production process. Therefore, when income flows from the producer sector to the household sector, it is part of the distribution phase.