In the circular flow model,

Question

Quizplus · Accepted Answer

In the circular flow model, both firms and households buy or sell in different markets. Firms sell goods and services in product markets and buy resources in factor markets, while households buy goods and services in product markets and sell resources in factor markets. Thus, the flow of money and goods in the economy goes in both directions. Option A is incorrect because money travels in the opposite direction to goods. Option B is incorrect because firms also buy from markets. Option C and D are incorrect because all firms engage in both buying and selling activities.

In the Circular Flow Model