The circular flow model ignores a host of major economic institutions and activities .Focusing on only one basic fact about how the economy works is the model's
A) way of getting around the ceteris paribus assumption
B) disadvantage because it distorts reality
C) flaw because there is no one single fact about an economy
D) strength in providing some understanding about how the economy works
E) effectiveness in creating policy recommendations

Question

Quizplus · Accepted Answer

The circular flow model's strength lies in its simplicity, which helps in understanding the basic functioning of an economy by illustrating the flow of goods, services, and money between households and firms.

The Circular Flow Model Ignores a Host of Major Economic