Questions
Single choice
In a typical circular flow model, which of the following statements are true? 1. Households sell resources in the factor/resources market 2. Firms demand resources in the factor/resources market 3. Money flows from firms to households is when households pay for exports 4. Money flows from foreign economies to firms is when households pay for imports 5. Money flows from households to the financial sector is when households save some of their disposable income in their bank accounts[Fill in the blank]
Options
A.a. 3
and 4 only
B.b. 2, 4, and 5 only
C.c. 1, 2, and 5 only
D.d. 1, 3, and 4 only
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Step-by-Step Analysis
To tackle this question, I will examine each statement in the context of the circular flow model.
1. Households sell resources in the factor/resources market. This is true because households provide labor, capital, and other resources to firms in exchange for income. In the factor market, households are suppliers and firms are demanders, so this statement correc......Login to view full explanationLog in for full answers
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