circular flow model

Definition

A simple economic model illustrating the flow of goods and services though the economy. In the model, producers are termed as "firms" while consumers are referred to as "households." Firms supply goods and services while households consume these goods and services. Factors of production (land, labor, capital) are supplied by the household to firms and the firms convert these into finished products for household consumption.

Use circular flow model in a sentence

  • You should follow your product through the circular flow model to see if there are any obvious places for improvement.

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  • The circular flow model was perfect and it allowed us to make choices that were better for our overall business.

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  • You should try to make sure that your product is doing what you set forth when making your circular flow model.

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