In the circular flow model:
A)households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses.
B)businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households.
C)households receive revenue for selling goods and services to businesses, and use that revenue to buy inputs from businesses.
D)Households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses AND businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households.

Question

Quizplus · Accepted Answer

The circular flow model shows the flow of goods, services, and money between households and businesses. Households provide inputs to businesses in exchange for income, which they then use to buy goods and services from businesses. Meanwhile, businesses receive revenue from households for their products and services, which they then use to purchase inputs (such as labor) from households. Therefore, both statements in option D accurately describe the circular flow model.

In the Circular Flow Model