Answer: The circular flow of income represents money moving through the economy. Circular flow of income can be seen in a situation where households purchase goods and services from firms by using the income they earned from firms by working for them.
Explanation:
Characteristics of circular flow of income are :-
It helps in studying or analysing the problems of disequilibrium.
It helps us in analysing the effects of leakages and inflows/injections hence helps in Taking appropriate policy measure for health of the economy .
Circular flow of income creates a networks of markets .
