Rap Raven T.

Macalindol
CLOCA - 2B

Inflows and Outflows

- Outflows (factors that decrease the level of economic activity)
 Savings
 Taxes
 Imports

- Inflows (factors that increase the level of economic activity)

 Investment
 Government Spending
 Exports

The circular flow of income, also known as circular flow, is an economic model in which
important exchanges are represented as flows of money, goods, and services, among
other things, between economic agents. Money and products flows in a closed circuit
have the same value but flow in the opposite direction. A circular flow of economic
activity defines all economic systems. This means that money and products (including
those needed by enterprises) circulate between businesses and families in a circular
pattern.  This situation is often illustrated using a diagram that allows us to visualize the
basic workings of the overall economy. The circular flow model describes the flow of
resources from households to producing unit, as well as the flow of products from
households to producing unit. Reverse money flows from firms to households and from
households to businesses accompany these transfers. The resource market,
households, product market, enterprises, and government are all part of the circular
flow.