Figure 2-2

-Refer to Figure 2-2. If Boxes A and B represent households and firms, then Boxes C and D of this circular-flow diagram represent
A)households and government.
B)firms and government.
C)the markets for goods and services and the markets for financial assets.
D)the markets for goods and services and the markets for factors of production.

Question

Figure 2-2
 
-Refer to Figure 2-2. If Boxes A and B represent households and firms, then Boxes C and D of this circular-flow diagram represent
A)households and government. 
B)firms and government. 
C)the markets for goods and services and the markets for financial assets. 
D)the markets for goods and services and the markets for factors of production.

Quizplus · Accepted Answer

In a circular-flow diagram, boxes typically represent different types of economic agents, while the flows between them represent economic transactions. Box C represents the markets for goods and services where households buy products from firms. Box D represents the markets for factors of production (like labor, land, and capital) where firms buy resources needed to produce goods and services from households.

Figure 2-2 -Refer to Figure 2-2. If Boxes a and B Represent