8
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Question 8 • CMS 2026-2027 Economics and Personal Finance CREDIT RECOVERY

The circular flow model examines interactions between which two groups?

Answer
A
firms and government
B
households and firms
C
households and consumers
D
firms and producers

Explanation

The circular flow model shows how households and firms interact in the economy. Households provide resources, such as labor, to firms and receive income; firms use those resources to produce goods and services that households buy. Therefore, the correct choice is households and firms.

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