A real flow in the circular flow diagram is
i. a firm's payments of wages to its workers.
ii. a household's purchase of a new car.
iii. a farmer's use of land to grow corn.

Question

Quizplus · Accepted Answer

Real flows refer to the flow of physical things like goods, services, or resources between firms and households. In this case, a household's purchase of a new car (ii) is a flow of a physical good, and a farmer's use of land to grow corn (iii) is the use of a natural resource, both of which are examples of real flows. A firm's payments of wages to its workers (i), however, is a monetary flow, not a real flow.

A Real Flow in the Circular Flow Diagram Is