ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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one way and business revenue another
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one way and products flow another
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the same way as goods and services
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same way as productive resources
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Detailed explanation-1: -What Is the Circular Flow Model? The circular flow model demonstrates how money moves through society. Money flows from producers to workers as wages and flows back to producers as payment for products. In short, an economy is an endless circular flow of money.
Detailed explanation-2: -Money flows clockwise, while goods, services, and resources flow counter-clockwise. The circular flow model is a simple tool for learning about the economy. It shows the relationship between households and businesses and how these different decision-makers in the economy fit together.
Detailed explanation-3: -In the basic (two-factor) circular flow model, money flows from households to businesses as consumer expenditures in exchange for goods and services produced by the businesses, then flows back from businesses to households for the labor that individuals provide.
Detailed explanation-4: -The circular flow model is a way to show the flow of money, goods and services in an economy. It shows people earning money by working for businesses and then spending it on the things they need and want from those businesses.
Detailed explanation-5: -In the basic model, the circular flow of income consists of two components: Firms: companies that produce goods and pay wages to employees. Households: individuals who receive wages from firms while simultaneously purchasing the goods and services from the firms.