Circular Flow Diagram
The circular flow diagram is an economic model of the economy in which the major exchanges are represented as flows of money, goods and services, etc. between economic agents.
Circular Flow Diagram Economics
Circular Flow The circular flow diagram pictures the economy as consisting of two groups — households and firms — that interact in two markets: the goods and services market in which firms sell and households buy and the labor market in which households sell labor to business firms or other employees. You can download circular diagram PowerPoint templates & Keynote slides that suit your presentation from our library. These Circular PowerPoint Templates come with different circular diagram designs, including circular flow diagrams, 3D diagrams, multi-layer diagrams and more. Choose the template which is apt for your business theme.
History[edit]
- see also History macroeconomic diagrams
Tableau économique by Francois Quesnay, 1759
The capital circle by John Stuart Mill, 1885
Economic value, price and distribution by Seager, 1904
Circuit flow of money by W.T. Foster, 1922
The competitive price system adapted from Samuelson, 1961
Circular flow model by Hrubovcak, 1995
Types of diagrams[edit]
Two sector circular flow diagram[edit]
Three sector circular flow diagram[edit]
Four sector circular flow diagram[edit]
4 actors & 3 markets
Five sector circular flow diagram[edit]
Other circular flow diagrams[edit]
Economic Circular flow with Capital Accumulation according to Keynes
See also[edit]
The following Circular Flow Diagram is included in our Circular Diagram Software. With the shapes, you can draw Circular Flow Diagram readily from built-in examples and templates! See how to create a circular chart from this video: Video Tutorial - How to Create a Circular Diagram
Circular Flow Diagram
What's a circular flow diagram?
The circular diagram (also called the circular model) is perhaps the easiest diagram of economics to understand. Even most children can understand its basic structure from personal experience. The circular diagram essentially displays the relationship of resources and money between firms and households. The basic circular diagram consists of two sectors that determine income, expenditure, and output: flows of physical things (goods or labor) and flows of money (what pays for physical things). A circular diagram depicts the inner workings of a market system and specific portions of the economy making it quite commonly used in a wide variety of presentations.
Why circular flow diagram is important?
Circular Flow Diagram Econ
1. It visualizes information in a clear and predetermined way and allows you to follow the flow of money through the system in economy.
2. The circle is considered to be the symbol of infinity and perfection. The circle has throughout history played an important role in art and aesthetics.
3. It provides a basis for organizing the wide array of macroeconomic indicators.
4. It helps one better understand the aggregate supply - aggregate demand model.