The circular flow model examines interactions between three main sectors of the economy:
1. **Households**: Households represent individual consumers who provide factors of production (such as labor) to businesses in exchange for income.
2. **Businesses (Private Sector)**: Businesses receive resources from households and produce goods and services that are sold back to households.
3. **Government (Public Sector)**: The government collects taxes from households and businesses and spends that money on public goods and services, which in turn affect households and businesses.
In summary, the circular flow model shows how households, businesses, and the government interact by exchanging goods, services, and resources in the economy.
