In a simple circular flow model,
A)households are suppliers of resources.
B)households are demanders of final products.
C)firms are demanders of resources.
D)all of the above are true.

Question

In a simple circular flow model,
A)​households are suppliers of resources.
B)​households are demanders of final products.
C)​firms are demanders of resources.
D)​all of the above are true.

Quizplus · Accepted Answer

In a simple circular flow model, households are suppliers of resources (labor, capital, land), which are demanded by firms to produce goods and services. In turn, households demand final products from firms. Thus, households are demanders of final products and firms are demanders of resources. Therefore, all of the above are true.

In a Simple Circular Flow Model