Circular Flow of Income

Countries don't operate in isolation – they buy and sell goods and services internationally. This international trade, with its exports and imports, significantly impacts the flow of money within a nation's borders. This article dives into how the

Within a healthy economy, money flows continuously. This circular flow of income involves households earning income, spending a portion on goods and services, and saving the rest. Businesses then use this income, along with their own revenue, to

A thriving economy relies on a constant flow of money circulating within the system. This flow, known as the circular flow of income, gets a boost from injections like investment, government spending, and exports. But what about the money that leaves

The circular flow of income visualizes the continuous flow of money within an economy. Households earn income, spend a portion on goods and services, and save the rest. Businesses use these savings, along with their own revenue, to invest in

A thriving economy requires constant movement and growth. This growth is fueled by injections, which pump money into the circular flow of income. These injections—investment, government spending, and exports—all play a crucial role in boosting demand

The circular flow of income depicts how money flows between businesses and households in an economy. However, this flow isn't perfectly circular. Some income gets withdrawn from the system (leakages), while other sources add income to the flow

The economy may seem complex, but the circular flow of income model offers a clear way to visualize how money moves through it. This model tracks the flow of goods, services, and income between different sectors, like households and businesses. By