In a circular flow diagram of the economy,households and businesses interact
A) in both product markets and resource markets
B) in neither product markets and resource markets
C) in product markets but not resource markets
D) in resource markets but not product markets
E) very rarely

Question

Quizplus · Accepted Answer

In a circular flow diagram of the economy, households supply resources (such as labor) to businesses in resource markets, while businesses supply goods and services to households in product markets. Therefore, households and businesses interact in both product markets and resource markets.

In a Circular Flow Diagram of the Economy,households and Businesses