Circular Flow Diagram
The circular flow diagram shows the relationship between producers and consumers within an economy. The producers are referred to as the firms and the consumers are referred to as households. The diagram shows how money flows through markets among the households and firms.


Below is an example of the circular flow diagram, it isn't quite like the one used in class.


external image CircularFlowDiagram.jpg



"The Circular Flow of the Economy" msuweb.montclair.edu, accessed April 15th, 2012,
http://msuweb.montclair.edu/~lebelp/CircularFlowDiagram.jpg.