The figure shows money flows that move in a circle. At the middle of a circle, a box labeled “governments” is displayed. Four boxes are displayed on the circumference of the circle in this order: households, goods markets, firms and factor markets. Two more boxes labeled as “financial markets” and “rest of the world” are displayed outside the circle.
A blue arrow moves from firms to factor markets. Another blue arrow labeled “Q” moves in a semicircle from factor markets to households. Two green arrows move out of households. One of them labeled “R” moves towards governments and the other labeled “V” moves towards financial markets. Four red arrows move into the goods market. They’re labeled as: “U” from government, “W” from households, “J” from ...
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