The figure above shows the circular flow model.
-In the figure above,which of the following represents a real flow of a factor of production?

Question

Quizplus · Accepted Answer

Labor is a factor of production and is represented as a real flow in the circular flow model. It moves from households to firms in exchange for wages. Wages, goods bought, and services sold are all monetary flows in the model. Firms' expenditures on factors of production could be either a real or monetary flow, depending on whether it is referring to actual purchases of factors or the payment for those purchases.

The Figure Above Shows the Circular Flow Model