The circular flow of income primarily affect households or firms as it provides the income that workers need to live and the revenue that businesses need to run.
Explanation:
This is known as the two sector circular flow of income economy in which households are providing their services to the industry and earning money (injection) in exchange of their duties or services.
While on the other side, business industry are producing or manufacturing goods which are demand of the consumers and they are spending (leakage) on these goods to fulfill their satisfaction. Thus in case both the sectors are providing income to each other and running the economy.
