According to the circular flow model of the market system, when resource-owners' money income is rising, then the costs to business firms must be falling.

Question

Quizplus · Accepted Answer

The circular flow model shows that resource-owners' money income is derived from their sale of resources to business firms, which in turn use those resources to produce goods and services. As resource-owners receive more money income, they may demand higher prices for their resources, which would increase costs for business firms. Therefore, if resource-owners' money income is rising, it could lead to higher costs for business firms, not lower costs.

According to the Circular Flow Model of the Market System