Refer to the above figure.If box A represents businesses and box D represents the product market in this circular flow model,then money flow in the model would be represented by:
A) (1),(2),(3),and (4).
B) (5),(6),(7),and (8).
C) (1),(3),(6),and (8).
D) (7),(5),(4),and (2).

Question

Refer to the above figure.If box A represents businesses and box D represents the product market in this circular flow model,then money flow in the model would be represented by:
A) (1),(2),(3),and (4). 
B) (5),(6),(7),and (8). 
C) (1),(3),(6),and (8). 
D) (7),(5),(4),and (2).

Quizplus · Accepted Answer

The money flow in the circular flow model would include transactions between businesses (A) and product markets (D) through the factors market (B) and households (C). Specifically, money flows from businesses to households as income (1), from households to businesses as consumption expenditures (3), from businesses to factors market as payments for resources (6), and from factors market to businesses as payments for production (8). Therefore, choices (1), (3), (6), and (8) represent the money flow in the circular flow model.

Refer to the Above Figure