<p>Yes! I put together this sketch to show it</p>

<p><a href="https://i.sstatic.net/zDNcS.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/zDNcS.png" alt="enter image description here"></a></p>

<p>For example</p>

<ol>
<li>Households can save money in banks, which inject money into the financial market</li>
<li>They are later compensated the form of a rate of return</li>
<li>Firms can borrow money </li>
<li>Later they need to pay an interest. This way the money flows from the firms back to the financial market</li>
</ol>

CC BY-SA 4.0
2019-01-19T19:43:20.230Z
That makes perfect sense and I thought about that as well, but my professor never showed the diagram with that scenario, so I wasn't sure if it was plausible or not. Thank you so much!
Ryan
CC BY-SA 4.0
2019-01-19T20:09:09.067Z
@Ryan Happy to help
caverac
CC BY-SA 4.0
2019-01-19T09:20:50.667Z
2019-01-19T09:20:50.667Z
caverac
<p>In Macroeconomics, we learn that the circular flow diagram is a simple economic model that illustrates the flows of goods and services through the economy. Can the arrow that connects the "Financial Market" sector of the economy to the "Firm" sector be double-headed? </p>

<p>Traditionally, in the class, I've learned that Firms borrow money from the financial market to make investments in capital (so the arrow is always pointing from the Financial Market to the Firms), but I've never seen a situation where money flows from the Firms into the Financial Market.</p>

<p>Can this occur? And if so, can you give an example of when?</p>

<p>Thanks!</p>

CC BY-SA 4.0
2019-01-22T10:20:49.710Z
A firm issuing stocks comes to my mind.
E. Sommer
<macroeconomics>
Can money flow from Firms into the Financial Market in the Circular Flow?
Ryan
# Can money flow from Firms into the Financial Market in the Circular Flow?

(Asked by: username_0 on 2019-01-19)

In Macroeconomics, we learn that the circular flow diagram is a simple economic model that illustrates the flows of goods and services through the economy. Can the arrow that connects the "Financial Market" sector of the economy to the "Firm" sector be double-headed?

Traditionally, in the class, I've learned that Firms borrow money from the financial market to make investments in capital (so the arrow is always pointing from the Financial Market to the Firms), but I've never seen a situation where money flows from the Firms into the Financial Market.

Can this occur? And if so, can you give an example of when?

Thanks!

**Tags:** macroeconomics

> **Comments:**
> **username_1**: A firm issuing stocks comes to my mind.  

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## 1 answers

### Answer by username_2 on 2019-01-19. Score: 2 | Accepted answer

Yes! I put together this sketch to show it

[![enter image description here](https://i.sstatic.net/zDNcS.png)](https://i.sstatic.net/zDNcS.png)

For example

1. Households can save money in banks, which inject money into the financial market
2. They are later compensated the form of a rate of return
3. Firms can borrow money
4. Later they need to pay an interest. This way the money flows from the firms back to the financial market

> **Comments:**
> **username_0**: That makes perfect sense and I thought about that as well, but my professor never showed the diagram with that scenario, so I wasn't sure if it was plausible or not. Thank you so much!  
> **username_2**: @username_0 Happy to help  

---

