Circular Flow Model | Definition & Examples
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Circular Flow Model | Definition & Examples
547K viewsFeb 9, 2016
Study.comBrianna Whiting
The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Based on this model, households earn income when firms purchase in factor markets. The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow inner set of arrows (shown in red) shows the corresponding flow of inp
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