An economic model that depicts how money moves across the economy is the circular flow model. Businesses need resources to generate the goods and services that households and households buy.
What is economy?
The mechanism through which a nation or region organizes its money, industry, and trade is concerned to as its “economy.”
The most popular version of this model displays the circular flow of revenue between the consumer and business sectors. The product market and the resource market are placed between the two.
Consumer spending is the mechanism through which households' money flows to the market for goods and services when they are in need of them. The product market purchases goods and services from companies and sells them to households, making a profit.
As a result, in the circular flow of the economy, money is utilised to purchase goods and services.
Learn more about on circular flow model, here:
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