![]() ![]() Leakages also do occur in the circular flow model. Therefore, the flow of products and money is highly dependent on economic cycles. In times of economic depression or recession, the flow of products and money remains at subdued levels. An economy is likely to experience a high flow of goods services and cash in times of economic prosperity. One thing to remember is that the flow of goods services and money does not occur at a constant rate all the time. Since civilized societies experience an endless flow of money on a daily basis, the circulation covers the flow of goods and services from producers to households or consumers in exchange for cash.
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