Answer: b
This is a circular-flow between “firms” and “households”. Firms produce goods which are consumed by households, and households make such goods for firms. Such making is possible since factors of production are owned by households.
Other options are not correct:
Option a: firms are also decision maker.
Option c: firms are the buyers of inputs.
Option d: all such productions (but not some) are consumed by households.
0:28:07 In the simple circular-flow diagram, households a. are the only decision makers. b. own the...
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