The circular flow of income shows

Question

Quizplus · Accepted Answer

The circular flow of income model shows the flow of goods and services from firms to households and the flow of payments (e.g., wages, rent, and profits) from households to firms. In return, firms use these payments to buy production factors (e.g., labor and capital) to produce more goods and services. This creates a circular flow of money payments and goods and services, with goods and services flowing in one direction and money payments flowing in the other direction. Option C accurately describes this flow.

The Circular Flow of Income Shows