Which of the Following Best Characterizes the Circular Flow of Income

question 98

Multiple Choice

Which of the following best characterizes the circular flow of income?

• A) Businesses buy resources from the government, and households buy goods and services from businesses.
• B) Businesses buy resources from households, and households use the money from the sale of resources to buy goods and services from businesses.
• C) Households buy factors of production from businesses, and businesses buy goods and services from households.
• D) The government purchases resources from businesses and households and then sells goods and services to businesses and households.

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Definitions:

GDP

Gross Domestic Product; the total market value of all final goods and services produced within a country in a given period.

Gross Domestic Product

A measure of the economic performance of a country, calculating the total value of all goods and services produced within its borders in a specific period.

Inputs and Outputs

The resources used in the production process (inputs) and the goods or services produced (outputs).

Pieter Bruegel

A Flemish Renaissance painter known for his landscapes, religious subjects, and depictions of peasant life.