Question

In the circular flow model _______.

a. goods markets provide for the transfer of money and labor markets provide for the transfer of inputs.
b. resource markets provide for the goods and services and product markets provide for the exchange of exchange of labor.
c. labor markets provide for the transfer of money and goods markets provide for the transfer of inputs.
d. resource markets provide for the exchange of labor and product markets provide for the exchange of goods and services.

Answer 1

In the circular flow model, goods markets provide for the transfer of money and labor markets provide for the transfer of inputs.

Explanation:

• The liquidity of money in goods markets is kept unhindered by the flow of goods, as a result of which, the transfer of money keeps happening.
• On the other hand, the labor markets function as the source of necessary input that is required for the business to keep running.
• When both these markets work in synchronous, there is a circular flow of entities within the market.