Significance of Circular Flow of Income

Significance of Circular Flow of Income
Circular flow of income is important to study because
Helps one to understand the mutual interdependence between the different sectors of Economy.
It helps one know whether the Economy is in equilibrium or not. Any distortion can be harmful and must be removed immediately.
Helps in the calculation of National Income.
Helps to discover if there are Leakages or Injections in the Economy.