In the simple circular flow model:
A)firms are suppliers of resources and demanders of products.
B)households are suppliers of products and demanders of resources.
C)households are demanders of products and suppliers of resources.
D)firms are the suppliers of both resources and products.
E)households are the suppliers of both resources and products.

Question

Quizplus · Accepted Answer

In the simple circular flow model, households are demanders of products (such as goods and services) and suppliers of resources (such as labor, capital, and land) to firms. On the other hand, firms are demanders of resources and suppliers of products. This reflects the interdependence and exchange between households and firms in a market economy, where goods and services are produced and consumed through the interaction of buyers and sellers.

In the Simple Circular Flow Model