Explain Circular flow in four sector model with the help of diagram.

This is the complete model of the circular flow of income that incorporates all the four macroeconomic sectors. Along with the above three sectors it considers the effect of foreign trade on the circular flow. With the inclusion of this sector the economy now becomes an ‘open economy’. Foreign trade includes two transactions, i.e., exports and imports. Goods and services are exported from one country to the other countries and imports come to a country from different countries in the goods market. There is inflow of income to the firms and government in the form of payments for the exports and there is outflow of income when the firms and governments make payments abroad for the imports. The import payments and export receipts transactions are done in the financial market. In other words, we can say that the four sectoral model shows the real picture of the economy..which helps to understand what happens actually in the economy _____ ___ ___ ____ ___ _____ _______ _____ ___ ________ _______.
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