Question

How does the circular flow model represent the interactions between households and firms? the model shows that households do not benefit from firms. the model shows that firms do not benefit from households. the model shows that firms and household benefit from one another. the model shows a lack of dependence within the economy.

Answer 1

The circular flow model represents the interactions between households and firms by showing that they benefit from one another.

Step-by-step explanation:

The circular flow model represents the interactions between households and firms by illustrating how they benefit from one another. In this model, households are the consumers of goods and services produced by firms, while firms rely on households for the labor they provide. For example, households purchase products and services from firms, which generates revenue for the firms.

On the other hand, households supply labor to firms, allowing them to produce goods and services to meet consumer demand. Therefore, the circular flow model shows that both firms and households benefit from each other in the economy.