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Why do workers get money? What do our earnings actually mean in economic terms?

Why do workers get money? What do our earnings actually mean in economic terms?

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Answer #1

Workers get money as return to the labor they provide to firms. This is the return in terms of currency, a flow from the firm to household in the circular flow model, in exchange of the labor provided, a flow from household to the firm.

In economic terms, our earnings are Wage income which is a component of GDP as per the Income approach. hen out wage income is consumed, it is Consumption demand (an injection) and when it is saved, it is Savings (a leakage) in the GDP model based on Expenditure method.

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