Question

The simplest circular model of the United States economy depicts the economy as a cycle in which resources flow between which two entities?
a.
supply and demand
b.
businesses and households
c.
the government and foreign countries
d.
goods and services

Answer 1

b. businesses and households

In the simplest circular-flow model, households supply resources (labor, land, capital) to businesses, and businesses produce goods and services that flow back to households, with money payments moving in the opposite directions.