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1 Αυγ 2024 · The circular flow model of economics shows how money moves through an economy in a constant loop from producers to consumers and back again.
The Circular Flow Model uses one of the most well-known diagrams in economics to illustrate how income & expenditure circulate through an economy.
The circular Flow Diagram (Fig 2.1) pictures the economy as consisting of two groups—households and firms—that interact in two markets: the goods and services market, in which firms sell and households buy and the labour market, in which households sell, labour to business firms or other employees.
12 Οκτ 2022 · The circular flow model of the economy distills the idea outlined above and shows the flow of money and goods and services in a capitalist economy. The economy can be thought of as two cycles moving in opposite directions.
A good model to start within economics is the Circular Flow Diagram (Fig 2.1). It pictures the economy as consisting of two groups—households and firms—that interact in two markets: the goods and services market in which firms sell and households buy and the labour market in which households sell labour to business firms or other employees.
The circular flow model is an economic model that presents how money, goods, and services move between sectors in an economic system. The flows of money between the sectors are also tracked to measure a country’s national income or GDP, so the model is also known as the circular flow of income.
What is the circular flow diagram? The circular flow diagram is one of the basic concepts of economics. This diagram explains the general movement of money on a day-to-day basis through the relationship that exists between the main economic agents, such as companies, families and the public sector.
