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Understanding the Four-Sector Circular Flow
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The Circular Flow in Four-Sector
The four sector model is formed by adding the foreign sector to the three models. The Circular Flow in Four-Sector consists of two kinds of international transactions. They are foreign trade and flow of capital and remittance. It is the case of an open economy. The economy receives from remittances and Exports. The economy pays for foreign factors and Imports.
