Resources that flow through the circular flow model include all of the following except:
a. land.
b. labor.
c. capital.
d. final goods.
Question 2
Which one of the following is an example of the circular flow model and shows the interdependence of households and firms?
a. Households demand their resources from the firms in the factor markets and, in turn, supply in the product market the goods and services produced by firms.
b. The firms go to the resource market to supply resources that households demand and, in turn, provide households with the goods and services produced for the product markets.
c. Households supply their resources to the firms in the factor markets and, in turn, demand in the product market the goods and services produced by the firms.
d. The firms in the factor markets pay to households in the form of wages, interest, rent and profitfor resources demanded.
e. The circuit is completed when the payments flow from households, through the product markets, and to the firms for the goods and services they demand.
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