Question

In a circular flow of model of a market system:

a-households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses

b- businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households

c- households receive revenue for selling goods and services to businesses, and use that revenue to buy inputs from businesses

d- A and B are both correct

Answer 1

Answer : d) A and B are both correct :

households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses & businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households

Explanation : This are the day today activities functioning in every market structures. For example - households refer with capital, or labor etc.. they provide services to the business or industries to manufacture goods similarly the business or industries' s end produce are provided to the market for households consumption.. hence, this flow or circulation of funds in the market.