Which of the following best describes the role of households and firms in the circular flow model of the economy?   Firms provide households with factors of production in exchange for money; households provide firms with goods and services in exchange for money   Households provide firms with factors of production in exchange for goods and services   Households supply the factors of production to firms in exchange for money; firms supply goods and services to households in exchange for money   Firms and households exchange money with one another in the pursuit of higher incomes and profits

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter4: Demand And Supply: Applications And Extensions
Section: Chapter Questions
Problem 8CQ
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Which of the following best describes the role of households and firms in the circular flow model of the economy?

 
  1. Firms provide households with factors of production in exchange for money; households provide firms with goods and services in exchange for money

     
  2. Households provide firms with factors of production in exchange for goods and services

     
  3. Households supply the factors of production to firms in exchange for money; firms supply goods and services to households in exchange for money

     
  4. Firms and households exchange money with one another in the pursuit of higher incomes and profits

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