Chapter 21 The second figure in the chapter, which shows the "Circular Flow of Income and Expenditure", offers some important insights. Most students look at a circular flow diagram and understand the basics, but there is a bit more. In particular, these is a general lesson that we must keep in mind at some points later in the class. What is this general lesson? And what are the basic lessons that we can learn from this figure? Well, to start the journey to answer these questions, click on the figure.