The circular flow diagram:
A)focuses on the flow of knowledge.
B)abstracts from the complexity of the real life economies.
C)does not include the resource markets and goods markets.
D)is not concerned with the interaction of individuals and firms in the economy.

Question

Quizplus · Accepted Answer

The circular flow diagram is a simplified representation of the real-life economy, which abstracts from its complexity. It includes the resource markets and goods markets, but does not take into account the interaction of individuals and firms in the economy. Therefore, option B is the most appropriate choice.

The Circular Flow Diagram