Discuss briefly the circular flow of income in a two sector economy with the help of a suitable diagram
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This graph shows the circular flow of income in a five-sector economy. The flow of money is shown with purple, and the flow of goods and services is shown with orange. Money flows in the opposite direction from goods and services.[1]

Basic diagram of the circular flow of income. The functioning of the free-market economic system is represented with firms and households and interaction back and forth.[2]
The circular flow of income or circular flow is a model of the economy in which the major exchanges are represented as flows of money, goods and services, etc. between economic agents. The flows of money and goods exchanged in a closed circuit correspond in value, but run in the opposite direction. The circular flow analysis is the basis of national accounts and hence of macroeconomics.
The idea of the circular flow was already present in the work of Richard Cantillon.[3] François Quesnay developed and visualized this concept in the so-called Tableau économique.[4] Important developments of Quesnay's tableau were Karl Marx' reproduction schemes in the second volume of Capital: Critique of Political Economy, and John Maynard Keynes' General Theory of Employment, Interest and Money. Richard Stone further developed the concept for the United Nations (UN) and the Organisation for Economic Co-operation and Development to the system, which is now used