With reference to the circular flow of income,how is the allocation of resources largely decided?
A)by central authorities only
B)by central authorities and firms only
C)by firms and households acting independently
D)by political parties and firms only
E)by individuals only

Question

Quizplus · Accepted Answer

The allocation of resources in the circular flow of income is largely decided by firms and households acting independently. Firms decide what goods and services to produce and how to allocate their resources to achieve maximum profit. Households decide what goods and services to consume based on their income and preferences. This interaction between firms and households in the markets determines the allocation of resources in the economy. Central authorities and political parties may influence this allocation through policies and regulations, but they do not have complete control over it. Similarly, individuals may have some impact through their consumer choices, but they are not the sole decision-makers.

With Reference to the Circular Flow of Income,how Is the Allocation