The Circular Flow Model

Exports Earnings

The earnings of a company or country that are generated through the export of goods or services.

Land

It is the land, everything that grows on it or under it meaning it includes the sea and all natural resources

Labour

This is the human factor of production. The mental and physical contribution of the existing workforce.

Capital

This is the factor of production that comes from investment in physical and human capital.

Entrepreneurship

The risk-taking factor of production. These people organise the remaining factors such as land, labour and capital.

The Circular Flow Model

In economics, a circular flow model is a diagram that is used to represent the monetary transactions in an economy. There are two flows present within the model including flow of physical things (goods or labor) and flow of money (what pays for physical things).

Taxes

A compulsory contribution to state revenue, imposed by the government on workers' income and business profits or added to the cost of some goods, services, and transactions.

Government spending

This is the expenditure that includes all government consumption, investment, and transfer payments.

Import Spendings

Amount of money used to bring goods to a country.

Final goods and Services

A good or service purchased directly by the consumer, as opposed to intermediate goods and services which are required for production of other goods and services

Rent

A tenant's regular payment to a landlord for the use of property or land.

Salary

A fixed regular payment, typically paid on a monthly or biweekly basis but often expressed as an annual sum, made by an employer to an employee.

Interest

Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.

Profit

Financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.

Consumer

A person who purchases goods and services for personal use.

Producer

A person, company, or country that makes, grows, or supplies goods or commodities for sale

Overseas Trade

the ​activity of ​trading ​goods and ​services with other countries, especially ones that are ​separated from each other by the sea

Investment Spending

Money spent on capital goods, or goods used in the production of capital, goods, or services. Investment spending may include purchases such as machinery, land, production inputs, or infrastructure.

Consumption Spending

Good and services bought by households in the satisfaction of their needs and wants. It includes non-durables such as food, semi-durables such as clothing, and durables such as refrigerators.

Government

A group of people that governs a community or unit.

Financial Institutions

An establishment that focuses on dealing with financial transactions, such as investments, loans and deposits.

Leakages

In economics, leakage refers to outflow from a circular flow of income model

Injections

Additions to investment, government spending or exports so boosting the circular flow of income leading to a multiplied expansion of output