Asked by Jordan Pollock on May 19, 2024
Verified
Refer to Figure 2-2. If Boxes A and B represent households and firms, then Boxes C and D of this circular-flow diagram represent
A) households and government.
B) firms and government.
C) the markets for goods and services and the markets for financial assets.
D) the markets for goods and services and the markets for factors of production.
Circular-flow Diagram
A Circular-Flow Diagram represents an economic model visually demonstrating the movement of money through markets between households and companies.
Financial Assets
Assets that are paper claims on some return or income, such as stocks, bonds, or bank deposits.
Factors Of Production
Elements involved in generating goods and services, such as land, workforce, financial investment, and entrepreneurial skill.
- Acquire an understanding of the circular-flow diagram and its components.
Verified Answer
AB
Alexia BilliartMay 23, 2024
Final Answer :
D
Explanation :
In a circular-flow diagram, boxes typically represent different types of economic agents, while the flows between them represent economic transactions. Box C represents the markets for goods and services where households buy products from firms. Box D represents the markets for factors of production (like labor, land, and capital) where firms buy resources needed to produce goods and services from households.
Learning Objectives
- Acquire an understanding of the circular-flow diagram and its components.