The Circular Flow of Income Model Shows That,if Households and Firms

question 55

Multiple Choice

The circular flow of income model shows that,if households and firms were the only two sectors in the economy,then:

• A)income received by households is equal to the value of output produced by firms.
• B)households directly lend a part of their savings to firms.
• C)firms own the resources of production and rent it out to households.
• D)resources used in production flow from households to firms.
• E)payments for goods and services flow from firms to households.

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