This example highlights the complexity of the circular flow model as inputs and outputs continually cycle throughout a systematic economy. Economics involves many moving, interacting parts.

In the study of economics, one learns the circular flow of the economy between firms and households. This post, however, presents another circular flow model based on capital and labor.

referred to as the circular flow of income and expenditure, in the Keynesian model of economics. Within this depiction, leakages are the non-consumption uses of income, including saving ...