The five sector circular flow of income shows the distribution of income within the economy. It has five main subsidiaries or contributors, including individuals, businesses, financial institutions, the government and international trade and financial flow. Each of these sectors contribute to either the leakages or injections (or both) of the circular flow of income.
Individuals, refers to all members of the economy, regardless of employment or financial status. They are concerned with the activities of earning an income and spending on goods and services. They are consumers, as well as the owners of productive resources.…
