The primary purpose of the circular flow model is to show how government policies affect businesses and households.

Question

Quizplus · Accepted Answer

While the circular flow model does show the interaction between businesses and households, its primary purpose is to illustrate how goods, services, and payments flow through the economy. It helps us understand the relationships between different economic agents and how changes in one part of the economy can affect other parts.

The Primary Purpose of the Circular Flow Model Is to Show