In the simple circular flow model, the funds received by a carmaker when it sells a car goes to
A) the workers who helped build the car.
B) the owners of firms who sold materials to the carmaker, and the rest stays with the firm.
C) only the owners of the carmaker.
D) the owners of all of the resources used to make the car.

Question

Quizplus · Accepted Answer

In the simple circular flow model, the funds received by a carmaker when it sells a car are distributed to the owners of all of the resources used to make the car. This includes payments for labor (workers), capital (equipment and facilities), land (natural resources), and entrepreneurship (the owners of the firm).

In the Simple Circular Flow Model, the Funds Received by a Carmaker