The circular flow of economic activity reflects the:
A)conduct of commercial activities.
B)interactions among firms and individuals.
C)tedium of ordinary activities.
D)flow of funds among banks and government agencies.

Question

Quizplus · Accepted Answer

The circular flow of economic activity illustrates the interactions among firms and individuals. It demonstrates how households supply factors of production (such as labor) to firms in exchange for income, and how firms use those factors of production to produce goods and services that are sold back to households. This cycle reflects the essential relationships between households and firms in a market economy.

The Circular Flow of Economic Activity Reflects The