In the simple circular flow model:
A) households are sellers of resources and demanders of products.
B) households are sellers of products and demanders of resources.
C) businesses are sellers of resources and demanders of products.
D) businesses are sellers of both resources and products.

Question

Quizplus · Accepted Answer

In the simple circular flow model, households are the owners of resources (like labor) and they sell these resources to businesses in exchange for income. On the other hand, households also demand products (like goods and services) from businesses and consume them. Therefore, households are both sellers of resources and demanders of products.

In the Simple Circular Flow Model