Question

What is circular flow of income in macroeconomics?

Answer 1

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[2].[better source needed] The circular flow analysis is the basis of national accounts and hence of macroeconomics.