In the circular flow diagram, the different payments made by ________ to ________ include wages, rent and profits.
A) households; firms
B) firms; the government
C) the government; households
D) firms; households

Question

Quizplus · Accepted Answer

In the circular flow diagram, households provide the factors of production (such as labor) to firms in exchange for income in the form of wages. Firms then use these factors of production to produce goods and services which they sell to households. The payments made by firms to households include wages for labor, rent for the use of land or capital, and profits for the owners of the firm. Therefore, option D is correct as it correctly identifies the payments made by firms to households.

In the Circular Flow Diagram, the Different Payments Made by ________