Refer to the provided ﬁgure. If box A represents households, B the product market, and C businesses, then ﬂow (2) and ﬂow (4) would represent

A) the ﬂow of labor and other resources.
B) the ﬂow of goods and services.
C) business spending revenues.
D) money incomes and consumer spending.

Question

Refer to the provided ﬁgure. If box A represents households, B the product market, and C businesses, then ﬂow (2) and ﬂow (4) would represent

A) the ﬂow of labor and other resources. 
B) the ﬂow of goods and services. 
C) business spending revenues. 
D) money incomes and consumer spending.

Quizplus · Accepted Answer

Flow (2) represents the flow of goods and services from businesses (C) to the product market (B), while flow (4) represents the flow of money from households (A) to the product market (B) in exchange for those goods and services. Therefore, these flows represent the exchange of goods and services for money income, which is characteristic of a market economy.

Refer to the Provided ﬁGure