ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Households buy resources from business firms
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Households sell products to business firms
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Households sell resources to business firms
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Business firms sell goods and services to households
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Business firms sell resources to households
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Detailed explanation-1: -The correct option is C. households sell resources to business firms. In the circular flow model consisting of households and businesses only two markets exist. One for products and another for resources.
Detailed explanation-2: -The correct answer is C. Goods and services (products) flow from businesses to the goods and services market.
Detailed explanation-3: -Households purchase goods and services, which businesses provide through the product market. Businesses, meanwhile, need resources in order to produce goods and services. Members of households provide labor to businesses through the resource market. In turn, businesses convert those resources into goods and services.
Detailed explanation-4: -The factor market is the market in which the factors of production are bought and sold. It is through this market that households supply businesses with the factors of production, in exchange for an income in the form of wages and salaries, interest, rent and profits.