Statement 1: In a two-sector economy with households and firms, there are no savings in the economy.
Statement 2: Real Flow in the form of factor services and final goods and services is equal to money flow between firms and households in a two-sector economy.
In the following questions, read the following statements and choose the correct alternative among those given below:
(a) Both the Statements are true.
(b) Both the Statements are false.
(c) Statement 1 is true and Statement 2 is false.
(d) Statement 2 is true and Statement 1 is false.
Ans – (a)
In a sector economy, savings is assumed to be zero, and real flow in the form of factors services and final goods and services are equal to money flow between firms and households in a two-sector economy.
Thus both statements are true.