The circular flow model shows the

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The circular flow model is a simple representation of the economy that shows the flow of expenditure and incomes that arise from the decisions made by households, firms, and government. It shows that households provide firms with labor and other inputs in exchange for wages and salaries, while firms produce goods and services that households buy. In turn, households buy these goods and services using their income, which includes wages and salaries, profits, and rent. The model also shows that the government plays a role in the economy by providing goods and services and collecting taxes, which it then spends on various programs and services. Overall, the circular flow model illustrates how different actors in the economy interact and exchange goods, services, and money in a continuous circular flow.

The Circular Flow Model Shows the