Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.
Definitions:
Erosion
In finance, the gradual reduction of earnings or assets, often due to competition or other external factors.
Patent
A form of intellectual property right granting the patent holder the exclusive right to make, use, sell, and offer for sale the patented invention for a certain period of time.
Final Cash Flow
Final Cash Flow is the last cash inflow or outflow in a series of transactions, often associated with the termination or exit of an investment.
New Product Design
The process of creating a new product to be sold by a business to its customers.
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