In the circular-flow diagram,
A)factors of production flow from government to firms.
B)income paid to the factors of production flows from firms to households.
C)goods and services flow from households to firms.
D)inputs and outputs flow in the same direction as the flow of dollars, from households to firms.

Question

Quizplus · Accepted Answer

In the circular-flow diagram, firms pay households for the factors of production (such as labor, land, and capital) that households provide. This payment is the income (wages, rent, interest, profits) that flows from firms to households.

In the Circular-Flow Diagram