Firms and households interact and exchange resources in the big Circular Flow of Income illustrated by the diagram below.
The reciprocal circulation of income between consumers and producers is a simplified version of the big circle of money (resources in this sense) since households provide expenditures (they spend money) and factors of production to firms who provide households goods and services to consume.
EconGuru was founded in 2006 by a group of Economics students who are passionate about learning and sharing everything in Economics, Finance, and Business.
The mission is to improve economic and financial literacy of the general public so people can better understand and react to economic problems and make good financial decisions.
We have no social profiles on any network, and if you like us, bookmark EconGuru.com or share us with your friends.
Comments 1