The diagram shows the circular flow of money in our economy. People own, manage, and work for businesses (incomes). People spend money for goods and services (expenditures).


Incomes are flows of payments FROM businesses TO households.

Incomes could include, for example, wages, commissions, or transfer payments.

Expenditures are flows of payments FROM households TO businesses.

Expenditures could include, for example, products, services, or taxes.