In the circular flow diagram, the counterclockwise direction shows the flow of _____, where households supply _____ and businesses supply _____.
A) money; purchases of goods and services; income to households
B) money; labor; goods and services
C) goods and services; labor; goods and services
D) goods and services; purchases of goods and services; income to households

Question

Quizplus · Accepted Answer

In the circular flow diagram, the counterclockwise direction typically represents the flow of money. Households supply labor (or factors of production) to businesses, and in return, businesses supply goods and services to the market.

In the Circular Flow Diagram, the Counterclockwise Direction Shows the Flow