6
practice testMultiple Choice

Practice Test

Question 6 • Personal Finance and Economics

Which best describes the circular flow model?

Answer
A
The model represents the interactions within sectors.
B
The model represents the movement of money throughout the economy.
C
The model represents the flow of goods and services between sectors.
D
The model represents the changing relationships between actors.

Explanation

The circular flow model shows how money moves among households, businesses, and other parts of the economy, alongside the flow of goods and services. Choice B best captures this movement of money throughout the economy; choice A describes only the goods-and-services side of the model.

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