Final answer:
The Circular Flow Model in economics demonstrates how money moves around an economy, emphasizing the interactions between households, firms, and sectors. It showcases the flow of income and illustrates the exchange of goods and services.
Explanation:
The Circular Flow Model in economics illustrates how money circulates in an economy through various sectors. In this model, money flows between households and firms in exchange for goods and services, showing the interconnectedness of different components within the economy. The circular flow of income describes the movement of money among sectors, highlighting how purchases and sales contribute to the overall economic activity.
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