A summary of the circular flow model which demonstrates the interdependence of households and firms in a market system.

This site uses an interactive Circular Flow Model to show the flow of payments for the factors of production (rent, wages, and interest) along with payments for finished goods and services. Questions are provided which ask the user if a...

Explains how resources, goods and services, and payments flow through the economy using the economic model of circular flow.

By the end of this section, you will be able to interpret a circular flow diagram, explain the importance of economic theories and models, and describe goods and services markets and labor markets.