What markets are depicted in the simple circular-flow diagram?
A) the market for goods and services, the financial market, and the market for the factors of production
B) the market for the factors of production and the financial market
C) the market for goods and services and the financial market
D) the market for goods and services and the market for factors of production

Question

Quizplus · Accepted Answer

The simple circular-flow diagram depicts two markets - the market for goods and services and the market for factors of production. In this diagram, households provide the input of factors of production (such as labor) to firms, which in turn produce goods and services that are sold back to households. Thus, the two markets depicted in the diagram are interdependent and interact with each other.

What Markets Are Depicted in the Simple Circular-Flow Diagram