Question

______In actual economy, goods and services are purchased by

a. households, but not firms or the government.
b. households and firms, but not the government.
c. households and the government, but not firms.
d. households, firms, and the government.
e. firms, but not households or the government.

Answer 1

In the actual economy, goods and services are purchased by households, firms, and the government. This is represented in the circular flow diagram of the economy, where households buy goods and services from firms in the product market, and firms buy resources and inputs from households in the factor market.

Step-by-step explanation:

Firms produce and sell goods and services to households in the market for goods and services, which is also known as the product market. Households pay for these goods and services, providing revenue to firms. This is represented by arrow 'A' in the circular flow diagram of the economy.

In return, households obtain income by providing the labor and resources firms need in the market for inputs, also known as the factor market. Firms pay for these inputs, such as wages and other factor payments, which is represented by arrow 'D' in the circular flow diagram.

Therefore, in the actual economy, goods and services are purchased by households, firms, and the government (Option D).