27719
AssignmentMultiple Choice

Introduction to Macroeconomics

Question 27719 • (Galli)WCA 2221 Civics/Economics 1st nine weeks 26-27

How does the circular flow model represent the interactions between households and firms?

Answer
A
The model shows that households do not benefit from firms.
B
The model shows that firms do not benefit from households.
C
The model shows that firms and household benefit from one another.
D
The model shows a lack of dependence within the economy.

Explanation

In the circular flow model, households provide firms with resources such as labor, and firms pay households income in return. Firms also provide goods and services that households buy, while households provide firms with revenue through their purchases. These exchanges show that firms and households benefit from and depend on one another, which is choice C.

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