Describe the four major sectors in an economy according to the macroeconomics point of view.
Describe the four major sectors in an economy according to the macroeconomics point of view.
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The four major sectors in an economy according to the macroeconomics point of view are:
1. Household Sector:
It includes consumers of goods and services and also the owners of factors of production. They supply factors like land, labour, capital and entrepreneur and receive income in return in the form of rent, wages, interest and profit respectively.
2. Producing Sector (Firms):
It includes all producing firms in the economy. To produce goods and services, the firm hires factors of production from the households.
3. Government Sector:
It acts in two capacities:
- As a welfare agency, it is involved in maintaining law and order, defence and other services of public welfare.
- As a producer, it produces goods and services in public sector enterprises.
4. Foreign Sector (Rest of the world sector):
This sector includes transactions with the rest of the world. It is involved in export and import of goods and flow of capital between the domestic economy and other countries of the world.
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