In terms of the circular flow diagram households make expenditures in the _____ market and receive income through the _____ market.
A)product; financial
B)factor; product
C)product; factor
D)capital; product

Question

Quizplus · Accepted Answer

In the circular flow diagram, households are the owners of factors of production such as labor, land, and capital. Therefore, they receive income through the factor market. On the other hand, households spend their income on goods and services produced by firms in the product market, making expenditures in this market. Hence, choice C is the correct answer.

In Terms of the Circular Flow Diagram Households Make Expenditures