Which statement is FALSE about the circular-flow diagram?
A)Households are the primary demanders of goods and services.
B)Firms are the primary suppliers of goods and services.
C)Money flows from households to firms as households offer factors of production for sale.
D)Money flows in the direction opposite to goods and services and factors of production.

Question

Quizplus · Accepted Answer

In the circular-flow diagram, money flows from firms to households as compensation for the households providing factors of production (like labor, land, and capital), not the other way around. Households spend this money to buy goods and services from firms, completing the cycle.

Which Statement Is FALSE About the Circular-Flow Diagram