It looked complicated, but in essence it was a circular flow of funds that created an upfront interest payment on which the investors could claim tax relief.

Complex avoidance schemes tend to have one thing in common: a circular flow of money sent around for no purpose other than to generate tax relief.

It will study a circular flow income in these sectors excluding rest of the world i.e. closed economy income.

So long as leakages are equal to injections circular flow of income continues indefinitely.

By giving values to the leakages and injections the circular flow of income can be used to show the state of disequilibrium.