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Sherry Garcia begins her first job after graduating from college and starts putting money away in a savings account. She believes she has removed this money from the circular flow between buyers and sellers that she studied in Introduction to Business. Is Sherry correct?

User Rsaw
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Answer:

No, even though she has saved this money, the bank will turn invest the money back into the circular flow.

Step-by-step explanation:

The circular flow of income is defined as a model that looks at the flow of money, goods, and services between economic agents.

Money is used to obtain goods and services. Goods and services flows in one direction while money flows in the opposite direction.

When Sherry saves money, the bank as an economic agent puts the money back into the circular flow in the form of loans. So Sherry is not taking the money out of circular flow.

User Plasmasnakeneo
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