3. The Four-Sector Economy: The circular flow model in four sector economy provides a realistic picture of the circular flow in an economy. The four sector economy comprises of: a) Household b) Firms c) Government d) Foreign Sector Here, there are two important components: a. Export: Export is referring to as an injection into the circular flow that consists of payment receives for goods and services sold to the rest of the world. b. Import: Import is referred to as a leakage from the circular flow that consists of payments made for goods and services purchased from the rest of the world. When firms exports goods and services to the foreign markets, injections are made into the model. On the other hand, when household, firm or gov...