Question

In the circular flow model, households provide _______ to firms. This is represented by the letter _______.

1) goods and services, a
2) money, a
3) labor, a
4) resources, a

Answer 1

In the circular flow model, households provide labor and resources to firms, depicted by the letter C for Labor Services. The model shows the exchange of labor for wages and the purchase of goods and services, demonstrating the economic interactions between households and firms.

Step-by-step explanation:

In the circular flow model, households provide labor and other resources to firms. This is represented by the letter C: Labor Services as shown in Figure 1.6. The circular flow model illustrates the exchange of goods and services along with labor between households and firms. Firms pay wages, salaries, and benefits to households in return for the labor they provide.

Firms also pay households for other resources such as land and capital, which translates into rent and dividends. Conversely, in the goods and services market, households pay firms for the products they purchase, thus creating a continuous flow of monetary exchange and resource distribution between the two entities in an economy.

In the circular flow model, households provide labor to firms. This is represented by the letter C. In the labor market, households provide their services, such as working in a factory or providing professional expertise, and receive payment from firms in the form of wages, salaries, and benefits.