The circular flow model is a model that represents the movement of money and products in economic ways. The model is divided into two categories: product market and factor markets. The two markets are product market and factor market. The product market is those whichmade up of households that buy the goods and services that are factors madeour factories make. There are two things in the product market: the firms (i.e. Companies) and the household (i.e. Buyers). The firms are selling goods to the product market, and they go from the product market to the households. The money flowflows from a household into the product market for goods, and the product marketmarket’s money flows into the firms for selling their output. If the product market is the only market in the economic circulation, economic activities would eventually have stopped. As the money flows between households to firms and firms to households, and there is no exchange. But we have factor markets, and factors markets are the productproducts that goesgo into the production. There are four types of factors of production.