The simplest circular-flow model shows the interaction between households and firms.In this model:
A)only barter transactions take place.
B)households and firms interact in the market for goods and services,but firms are the only participants in the factor markets.
C)firms supply goods and services to households,which in turn supply factors of production to firms.
D)attention is focused on real flows of goods,services,and factors of production,but money flows between households and firms are ignored for simplicity.

Question

Quizplus · Accepted Answer

The simplest circular-flow model shows that firms supply goods and services to households, which in turn supply factors of production to firms. This model focuses on the real flows of goods, services, and factors of production, rather than the money flows between households and firms, which are ignored for simplicity. It does not involve barter transactions, and firms are not the only participants in the factor markets.

The Simplest Circular-Flow Model Shows the Interaction Between Households and Firms.In