In the simplest circular-flow model,households supply _____ and demand _____.
A)capital;barter
B)wages and income;capital markets
C)factors of production;goods and services
D)firms;markets

Question

Quizplus · Accepted Answer

The simplest circular-flow model illustrates the flow of goods and services and factors of production. Households supply factors of production, such as labor, land, and capital, and demand goods and services. Firms, on the other hand, demand factors of production and supply goods and services. Choice A is incorrect because households do not supply capital or barter in the circular-flow model, and choice B is incorrect because capital markets are not explicitly shown in the model. Choice D is also incorrect because households do not supply firms; it is the other way around.

In the Simplest Circular-Flow Model,households Supply _____ and Demand _____

In the Simplest Circular-Flow Model,households Supply _ and Demand _