The two sectors of the economy in the simple circular flow model are
A) the employed and the unemployed.
B) foreign markets and domestic markets.
C) households and businesses.
D) the private sector and the public sector.

Question

Quizplus · Accepted Answer

The simple circular flow model depicts the flow of goods, services, and money between households and businesses. Therefore, the two sectors of the economy in the model are households and businesses. Choice A is incorrect because it refers to employment status, which is not a sector of the economy. Choice B is incorrect because it refers to markets, not sectors. Choice D is incorrect because it refers to ownership rather than economic activity.

The Two Sectors of the Economy in the Simple Circular