The government sector collects taxes, which are considered leakages. Households provide factors of production to firms, which assists in the production of goods and services. The foreign sector purchases exports, which are considered injectors.
Explanation:
Firms and families go to the merchandise and enterprises advertise, where firms supply products and ventures and families devour these products and enterprises. Hence, pay goes from family units to firms (A) and firms give merchandise and ventures to families (B).
In a subsequent minute, the pay that is with the organizations is utilized with the variables of creation (capital and work) in the components advertise. Work is given by families, so salary is given to families through wages (C). At last, the families that work in the factor showcase produce the products that have a place with the organizations (D). At that point the cycle restarts! This cycle is known as the circular flow of income.
