Answer :
Achieving full employment can be challenging due to various factors such as technological changes, cyclical fluctuations in the economy, and structural unemployment. Additionally, economic policies and government interventions play a role in influencing employment levels.
1. Households: In the circular flow, households are the consumers and owners of resources. They provide factors of production (such as labor and capital) to businesses in exchange for income.
2. Businesses: Businesses are the producers in the economy. They hire labor and purchase other inputs from households, which they use to produce goods and services.
3. Government: The government plays a crucial role in the circular flow. It levies taxes on households and businesses, which generate revenue for the government. This revenue is then used to provide public goods and services, redistribute income, and regulate economic activities.
4. Foreign Sector: The foreign sector refers to international trade and interactions with other countries. It involves exports (goods and services sold to other countries) and imports (goods and services purchased from other countries). Exports bring money into the economy, while imports take money out.
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