Question

Which best describes the circular flow model?
Responses

The model represents the movement of money throughout the economy.
The model represents the movement of money throughout the economy.

The model represents the interactions within sectors.
The model represents the interactions within sectors.

The model represents the changing relationships between actors.
The model represents the changing relationships between actors.

The model represents the flow of goods and services between sectors.
The model represents the flow of goods and services between sectors.

Answer 1

The model represents the movement of money throughout the economy.

Explanation: the circular-flow diagram shows money flows (payments, wages, consumption) and corresponding real flows (goods, services, factors) between households, firms (and often government and foreign sectors).