The circular flow of economic activity is a model of the:
A)flow of goods, services, and payments between households and firms.
B)influence of government on business behavior.
C)role of unions and government in the economy.
D)interaction among taxes, prices, and profits.

Question

The circular flow of economic activity is a model of the:
A)​flow of goods, services, and payments between households and firms.
B)​influence of government on business behavior.
C)​role of unions and government in the economy.
D)​interaction among taxes, prices, and profits.

Quizplus · Accepted Answer

The circular flow of economic activity is a model that illustrates the flow of goods, services, and payments between households and firms. It shows how income earned by households from firms is used to buy goods and services produced by firms, which in turn generates more income for the firms and creates a continuous cycle of economic activity.

The Circular Flow of Economic Activity Is a Model of The