Two sector Model

 Two sector Model is the basic economic model.In two sector Model, there is two components. such as: households and firms.In two two sector Model Households  provide factor of production to produce goods and services.In stead of factor of production households get factors of payments.Households use their factor of payment to purchase goods and services and firms provide to households goods and services in stead of consumer spending.In this model there is no savings and investment.Houesholds spend all of their income to purchase commodity.