The Circular Flow Diagram has dominated economic thought for over a century. Yet, all along we’ve known its shortcomings: over-aggregation, static capital, instantaneous production, and homogeneous ...

This diagram shows how money often ... cycle throughout a systematic economy. Economics involves many moving, interacting parts. A circular flow model can include at least six of them.

The circular-flow diagram’s greatest problem is, in fact, its circularity. While real-world economic analysis has a beginning, an ending, and ever-changing processes, the circular-flow diagram has no ...

referred to as the circular flow of income and expenditure, in the Keynesian model of economics. Within this depiction, leakages are the non-consumption uses of income, including saving ...