Circular flow model.

-If line (1) represents the flow of goods and services, then:

Question

Circular flow model.
 
-If line (1) represents the flow of goods and services, then:

Quizplus · Accepted Answer

In a basic economic model, line (1) representing the flow of goods and services implies that line (2) would represent the flow of money in the opposite direction, completing the circular flow model. Box B typically represents businesses in such models, as they produce goods and services. Box C, in contrast to representing input markets, would more accurately represent factor markets (or resource markets) where businesses acquire what they need to produce goods and services, but given the options, B and C's descriptions align with common representations in economic diagrams. Therefore, all the statements are correct in the context of a simplified economic model.

Circular Flow Model. -If Line (1) Represents the Flow of Goods and Services