Money flow

In the simplified economic model of a closed economy, private households receive money income in the form of wages, interest and rents for their supply of factor services (labor, capital, land). Households use this income as consumption expenditure to demand goods and services on the goods market. From there, the money is returned to the companies as sales returns, which use it to buy services from private households on the factor market. – If money is saved, it flows to banks, which on-lend it to companies for investment purposes. – See hoarding, saving, saving rate.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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