O determined by a central authority O based primarily on custom and habit. O mos

Question

O determined by a central authority O based primarily on custom and habit. O mostly directed by self interest. DQuestion 7 10 pts Which of the following is illustrated by the circular flow of income? O that the flow of payments moves in the same direction as the flow of goods O that firms own the factors of production O that there is no relationship between goods markets and factor markets O the flows of expenditures and income in a household O the interaction of households and firms through the factors and goods markets 10 pts D I Question 8

Explanation / Answer

The circular flow of income shows the interaction of households and firms in terms of the movements of factors of payments and goods from households to firms and back to households. It is an attempt to simplify the continuous flow of money and goods between the economic agents like firms and households in a closed economy. But in an open economy, circular flow of income includes government and financial market as well. There are injections and leakages in the system.

options b,d,e are correct

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