The Circular Flow Diagram has dominated economic thought for over a century. Yet, all along we’ve known its shortcomings: over-aggregation, static capital, instantaneous production, and homogeneous ...

Patinkin, D. (1973). In Search of the “Wheel of Wealth” On the Origins of Frank Knight’s Circular-Flow Diagram. The American Economic Review, 63, 1037-1046.

To put it plainly, we need one another. The economy is interrelated — as captured by the circular flow diagram, a core economic model.