Which One of the Following Is an Example of a Circular

question 113

Multiple Choice

Which one of the following is an example of a circular flow model and shows the interdependence of households and firms?

• A) Households demand their resources from firms in the factor markets and, in turn, supply in the product market, the goods and services produced by the firms.
• B) Firms go to the resource market to supply resources that households demand and, in turn, provide households with the goods and services produced for the product markets.
• C) Households supply their resources to firms in the factor markets and, in turn, demand in the product market, the goods and services produced by the firms.
• D) Firms in the factor markets pay households, in the form of wages, interest, rent and profit, for resources demanded.

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Definitions:

Parabola

A symmetrical plane curve formed by the set of all points equidistant from a fixed point (focus) and a fixed straight line (directrix).

Upward

Directed or moving towards a higher place or position.

Downward

Describes the direction that is towards a lower position or level.

Graph

A visual representation of data or mathematical functions, often displayed within a coordinate system.