The Circular Flow Of Income 

The circular flow of income and expenditure refer to the process whereby national income and expenditure of an economy follow in a circular manner continuously through time.

The various components of national income and expenditures such as saving, investment, taxation, government expenditures, exports, import, etc. Are soon on diagram in the form of current and cross current in such a manner that national income equal National expenditure.

The circular flow of income or circular flow is a model of the economy in which the major exchange are represented as follows of money good s and services etc between economic agent the flow of money and goods exchange in a closed circular but in the opposite direction the circular flow analysis is the basis of national account and hence of macroeconomics.