See the below image for the Circular flow of a mixed economy diagram. The circular flow model of the economy distills the idea outlined above and shows the flow of money and goods and services in a capitalist economy.
The most common form of this model shows the circular flow of income between the household sector and the business sector. Between the two are the product market and the resource market. Households purchase goods and services, which businesses provide through the product market.
When households pay for the Nutella jars, the money will reach the factory owners, completing the money’s circular flow. It is important to note that the economy runs on several thriving circular money movements. The above example is simplistic.
Circular flow of a mixed economy image
