The Circular Flow Model is a simple way to show how money and resources move in an economy.
It helps us understand how households and businesses work with each other:
Households provide labor to businesses. This means people living in homes work for companies.
Businesses pay wages to households. This is the money that companies give to workers for their job.
This model is important because it shows how spending and income are connected.
For instance, when a household buys groceries, the grocery store makes money. This money allows the store to pay its employees.
Overall, the Circular Flow Model helps us see how economic activity works. It gives us a better idea of how the economy grows and how healthy it is.
The Circular Flow Model is a simple way to show how money and resources move in an economy.
It helps us understand how households and businesses work with each other:
Households provide labor to businesses. This means people living in homes work for companies.
Businesses pay wages to households. This is the money that companies give to workers for their job.
This model is important because it shows how spending and income are connected.
For instance, when a household buys groceries, the grocery store makes money. This money allows the store to pay its employees.
Overall, the Circular Flow Model helps us see how economic activity works. It gives us a better idea of how the economy grows and how healthy it is.