The two basic markets in the simple circular flow model are the
A)product and resource market
B)export and product market
C)export and import market
D)household market and the business market
E)business market and the government market

Question

Quizplus · Accepted Answer

The simple circular flow model illustrates how households and businesses interact in two markets: the product market where households buy goods and services from businesses, and the resource market where businesses buy inputs such as labor and capital from households. Therefore, the correct answer is A) product and resource market. Neither exports, imports, nor the government or business markets are included in the basic circular flow model.

The Two Basic Markets in the Simple Circular Flow Model