- Households provide resources to businesses
- Firms provide income to households
- Firms use the resources to produce goods and services for households
- Households provide expenditure to businesses
- Cycle.
Representing the interdepedence of economic decision-makers.
An injection refers to an addition of money (into the economy), and a leakage refers to a withdrawal of money.
If injections > leakages, circular flow increases, vice versa.
- Taxation
- Savings
- Imports
- Government Spending
- Investements
- Exports