The circular flow of income model shows:
A)the flow of output and income within one sector of the economy.
B)how different sectors of the economy are linked together.
C)that income is rarely equal to output.
D)how business firms interact with one another.
E)how businesses sell their resource services to households.

Question

Quizplus · Accepted Answer

The circular flow of income model shows how different sectors of the economy (households, businesses, government, and the rest of the world) are linked together through the flow of resources, goods, and money. It illustrates how income earned by households from businesses is spent on goods and services produced by those same businesses, creating a continuous flow of economic activity.

The Circular Flow of Income Model Shows