Based on the Circular Flow Model, Money Flows from Households

question 9

Multiple Choice

Based on the circular flow model, money flows from households to businesses in:

• A) factor markets.
• B) product markets.
• C) neither factor nor product markets.
• D) both factor and product markets.

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Definitions:

Possession

The condition or reality of being the owner or holder of an item, in either a physical or legal capacity.

Collateral

An asset that a borrower offers a lender to secure a loan. If the borrower fails to repay the loan, the lender may seize the collateral.

Oral Agreement

A verbal contract in which the terms have been agreed upon through spoken communication, as opposed to written, but is still legally binding in some cases.

Perfection

In legal finance, the process of securing an interest in collateral, ensuring a lender's rights are prioritized over others in the event of borrower default.