GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Consumers and Producers
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Business and Households
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Goods & services
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How consumers and producers are interdependent
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Detailed explanation-1: -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-2: -The circular flow model shows the interaction between two groups of economic decision-makers-households and businesses-and two types of economic markets-the market for resources and the market for goods and services.
Detailed explanation-3: -Households and firms depend on each other in the circular flow of income in case of a two-sector model. Participants of the two-sector economy are households and producers. Flow of money from producers to households as payments for the purchase of factor services has been a continuous process.