The lower portion of the circular flow model contains factor markets in which households provide:

Question

Quizplus · Accepted Answer

The lower portion of the circular flow model contains factor markets where households provide factors of production such as natural resources, labor, and capital. This is then used by businesses to produce goods and services which flow back to households in the form of income. Therefore, option C is the correct answer. Option A is incorrect because households provide goods and services to product markets, not factor markets. Option B is incorrect because it refers to household behavior in terms of savings, spending, and investment, which is not relevant to the lower portion of the circular flow model. Option D is incorrect because it refers to the output of all final goods and services produced which flows to product markets, not factor markets where households provide factors of production.

The Lower Portion of the Circular Flow Model Contains Factor