The Beechmont Crest Guide to Economics
Goods and Money Flow in a Circle
According to the circular flow model of goods and money, everyone is both a consumer and a producer.
For example, as consumers, we all purchase things: cable television, jewelry, food, automobiles, etc.
At the same time, consumers sell their goods and services on the market. They sell their homes to other consumers. Consumers also sell their labor (that is, if they want to have money to consume with) to the very companies that make things to sell to them and other consumers.
A simplified version of this model is shown below.
