39 in the circular flow diagram showing how a market system works
Circular flow diagram is the visual model of economy which shows how money flows through the markets among household and firms. The outer circle shows that households willingly supply resources—human resources, natural resources, capital goods, and entrepreneurship—to businesses in the factor market. b. The Circular Flow Model The circular flow model illustrates the economic relationships among all players in the economy: households, firms, the factors market, the goods-and-services market, government, and foreign trade. In the macroeconomy, spending must always equal income. The circular flow model is a diagram illustrating the flow of ... The circular flow of economic activity is a model showing the basic economic relationships within a market economy. It illustrates the balance between injections and leakages in our economy. In the circular flow diagram showing how a market system works