The circular flow of income diagram shows the participants in a four-sector market economy. As a part of economics and general finance, we all are taught how the economy can reproduce itself. The idea is borne out of the theory that households spend money on goods and services from firms; the firms have the means to purchase labor from the households, which the households then purchase goods and services. In the following circular flow, we have some important models, like the household sector, business sector, government sector, and foreign sector. We have illustrated economic resources (land, labor, capital, enterprise), income (rent, wages, interest, profit), and more.
