The circular flow of economic activity is a model of the:
A)flow of goods, services, and payments between households and firms.
B)influence of government on business behavior.
C)role of unions and government in the economy.
D)interaction among taxes, prices, and profits.
E)economy's banking system.

Question

Quizplus · Accepted Answer

The circular flow of economic activity model shows the flow of goods, services, and payments between households (consumers) and firms (producers). It illustrates how businesses produce goods and services, which households then consume, and how households provide the labor that businesses need to produce goods and services. Money flows from households to businesses in exchange for goods and services, and flows back from businesses to households as wages, profits, and rent.

The Circular Flow of Economic Activity Is a Model of The