The simple circular flow model shows both the real flow of goods, services, and the factors of production as well as money flow

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The simple circular flow model in economics illustrates the continuous movement of goods and services between producers and consumers and the corresponding flow of money. It shows how households provide factors of production (like labor) to businesses, and in return, businesses provide goods and services. Money flows in the opposite direction, with businesses paying wages, rent, and profits to households, and households spending money on goods and services produced by businesses.

The Simple Circular Flow Model Shows Both the Real Flow