ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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stores that sell goods and services to households
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the government paying for public goods
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households selling their labor to businesses
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households receive income from businesses
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Detailed explanation-1: -The circular flow model is an economic model that shows the flow of money through the economy. The most common form of this model shows the circular flow of income between the household sector and the business sector. Between the two are the product market and the resource market.
Detailed explanation-2: -The circular flow model demonstrates how money moves from producers to households and back again in an endless loop. In an economy, money moves from producers to workers as wages and then back from workers to producers as workers spend money on products and services.
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: -In the product market, businesses are the sellers while households are the buyers. In the resource market, businesses are the buyers while households are the sellers. The flow of resources, goods and services, and money occur in a circular flow model.