The decisions of firms and households are

Question

Quizplus · Accepted Answer

The circular flow model shows that firms and households interact through markets, with firms supplying goods and services to households in exchange for payment, and households supplying labor and other resources to firms in exchange for income. These interactions are coordinated by the forces of supply and demand in markets for goods, services, and factors of production. While the government may play a role in regulating or influencing these markets, the overall coordination is primarily achieved through market mechanisms.

The Decisions of Firms and Households Are