CIRCULAR FLOW: The continuous movement of production, income, and resources between producers and consumers. This flow moves through product markets as the gross domestic product of our economy and is then the revenue received by the business sector in payment for this production. This stream of revenue then flows through resource markets as payments by businesses for the resources employed in production. The payments received by resource owners, however, is nothing more than the income of the household sector. The resource owners of the household sector use this income to purchase goods and services through the product markets, coming full circle to where we began.

     See also | production | consumption | income | resources | product markets | resource markets | financial markets | business sector | household sector | government sector | foreign sector | investment | saving | government purchases | exports | imports |

CIRCULAR FLOW, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: April 27, 2024].

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A condition in which owners of a business are personally held responsible for any debts created by the business. Proprietorships and partnerships are the two types of business organizations in which owners have unlimited liability. Unlimited liability tends to restrict the size of a business and prevents large scale production. The alternative to unlimited liability is limited liability, a characteristic of corporations.

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