Question

In the simple circular flow diagram

a.Households spend all of their incomes
b.All goods and services are bought by households
c.Expenditures flow through markets for goods and services, while income flows through markets for factors of production
d.All of the above are true

Answer 1

The circular flow diagram shows how households and firms interact in the goods and services market and labor market.

Step-by-step explanation:

The circular flow diagram shows how households and firms interact in the goods and services market, and in the labor market. In the goods and services market, households receive goods and services and pay firms for them. In the labor market, households provide labor and receive payment from firms through wages, salaries, and benefits.