Which of the following is true of the circular flow model?
I.Personal consumption spending flows from households to firms.
II The production of goods and services generates income to households.
III.Consumers finance their personal consumption spending by supplying factors of production to firms.

Question

Quizplus · Accepted Answer

The circular flow model illustrates how households and firms interact in the economy. Households spend on goods and services (I), firms pay households for factors of production, generating income (II), and households supply factors of production to finance their spending (III).

Which of the Following Is True of the Circular Flow