circular flow of income model

The circular flow of income model demonstrates the important relationships between sectors in the Australian economy. It can also be useful for understanding and explaining current conditions of these sections. It is a useful tool in evaluating the government budget and areas of spending to keep the economy stable. The circular flow of income model is made up of five sectors. These include the household, firms, finance, government, and external sectors. Each of these sectors …

…Overall the proposed government budget is not very good for the current economy of Australia. I beleive that if they were to outlay more money, the nations economy would grow and prosper. The circualr flow of income model is a usefull tool in studying the economy, and sectors of that economy. It also helps to understand where money goes when it is spent or saved, and why the role of every sector is so important.