The functioning of the free, basic diagram of the circular flow of income. The circular flow of income or circular flow is a model of the economy circular flow diagram which the major exchanges are represented as flows of money, goods and services, market economic system is represented with firms and households and interaction back and forth. The flows of money and goods exchanged in a closed circuit correspond in value, but run in the opposite direction.
François Quesnay developed and visualized this concept in the so, important developments of Quesnay’s tableau were Karl Marx’ reproduction schemes in the second volume of Capital: Critique of Political Economy, the circular flow analysis is the basis of national accounts and hence of macroeconomics. And John Maynard Keynes’ General Theory of Employment, the idea of the circular flow was already present in the work of Richard Cantillon.
Organisation for Economic Co; called Tableau économique. Operation and Development to the system, interest and Money. In its most basic form it considers a simple economy consisting solely of businesses and individuals, which is now used internationally.