Theories/Speculation In a simplified model of an economy, known as a circular flow diagram, households own the factors of production.

The circular flow model is aptly named because funds tend to continuously flow between sectors. As highlighted in the diagram below, money often flows from one sector to another, awarding benefits ...

The circular flow model of economics shows how money moves through an economy in a constant loop from producers to consumers and back again, factoring into a nation’s GDP.