Figure 2-18
-Refer to Figure 2-18. One segment of the circular flow diagram in the figure shows the flow of funds from economic agents E to market F. Who are economic agents E and what is market F?
A) E = households; F = product markets
B) E = firms; F = product markets
C) E = households; F = factor markets
D) E = firms; F = factor markets

Question

Figure 2-18 
-Refer to Figure 2-18. One segment of the circular flow diagram in the figure shows the flow of funds from economic agents E to market F. Who are economic agents E and what is market F?
A) E = households; F = product markets 
B) E = firms; F = product markets 
C) E = households; F = factor markets 
D) E = firms; F = factor markets

Quizplus · Accepted Answer

Economic agents E in this segment are households, which supply funds to the product market F. Therefore, choice A is correct. Choice B is incorrect because firms do not typically supply funds to the product market, but rather sell goods and services through it. Choice C is incorrect because households do not typically receive funds from factor markets, but rather offer their labor and other resources for sale in those markets. Choice D is incorrect for the same reasons as choice B.

Figure 2-18 -Refer to Figure 2-18. One Segment of the Circular Flow