According to the circular flow diagram,with households and firms as the only two sectors,money saved by the households reenters the economy in the form of:
A)human capital.
B)investment spending.
C)fiscal spending.
D)consumption spending.
E)deposits.

Question

Quizplus · Accepted Answer

The money saved by households is usually invested by firms as investment spending. This can include expanding the production capacity, developing new technology, or launching new products. Investment spending by firms ultimately leads to increases in productivity and economic growth.

According to the Circular Flow Diagram,with Households and Firms as the Only