The Simplest Circular-Flow Model Shows the Interaction Between Households and Firms.In

question 87

Multiple Choice

The simplest circular-flow model shows the interaction between households and firms.In this model:

• A)only barter transactions take place.
• B)households and firms interact in the market for goods and services,but firms are the only participants in the factor markets.
• C)firms supply goods and services to households,which in turn supply factors of production to firms.
• D)attention is focused on real flows of goods,services,and factors of production,but money flows between households and firms are ignored for simplicity.

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Definitions:

GST

Goods and Services Tax, a type of value-added tax imposed on the majority of goods and services that are sold within the country for local use.

Supplies

Materials and goods held for use in the production process or office operations, often considered short-term assets in financial accounting.

GST and PST

Taxes applied to the sale of goods and services; GST is a federal tax in Canada, while PST is a provincial sales tax.

Sold

The act of exchanging a product or service for money or other consideration.