An example of a money flow in the circular flow diagram is

Question

Quizplus · Accepted Answer

The student's payment of tuition to her university is an example of money flowing from households (student) to firms (university) in exchange for a service (education). This represents a part of the circular flow of income and expenditure, where households provide input (in this case, money) to firms in exchange for goods and services, which generates income for the firms, which is then spent on factor inputs, producing goods and services, and eventually returned to households as income.

An Example of a Money Flow in the Circular Flow