In the circular flow model, households receive income from the market and save through the
Market.
A)goods; financial
B)factor; financial
C)goods; factor
D)factor; goods

Question

Quizplus · Accepted Answer

In the circular flow model, households are the suppliers of factors of production while businesses are the demanders. Household factors include labor, land, capital, and entrepreneurship. In exchange for these factors, households receive income from the market, which includes wages, rent, interest, and profits. This income is then used to buy goods and services from the market, and any remaining income can be saved or invested through the financial market. Therefore, households save through the financial market, not the goods market.

In the Circular Flow Model, Households Receive Income from the Market