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U.S. economy flow of funds through households: explain the recycling process and benefit

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In the flow of funds in the U.S. economy, households are the main source of funds. Explain the process through which household funds are recycled. What is the benefit of this process?

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The expert explains the process through which household funds are recycled. The benefits of this process are determined.

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Most paychecks get deposited into a bank account. The bank uses those deposits to make loans to other bank customers who can then use the borrowed funds to put back into the economy in the form of purchased goods. For example a new car: The Car dealer has now made a sale and has the funds to pay their employees who will likely deposit them into a bank account to be leant out again. The flow of funds is ...

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