Final answer:
The correct answer is 'C. resource market and product market'. The circular flow model features two key markets: the resource market, where households sell labor to firms, and the product market, where firms sell goods and services to households.
Step-by-step explanation:
The two basic markets shown by the simple circular flow model are the resource market (or labor market) and the product market. In this model, the economy is visualized as consisting of two main groups: households and firms. Households sell labor to businesses through the resource market, and in turn, receive wages and other forms of income. Firms manufacture goods and services, which they sell to households in the product market. The flow of goods and services and financial payments between firms and households happens through these two markets, which are interconnected.
The correct answer to the question is 'C. resource market and product market'. The 'resource market' is where households provide labor and other resources to firms in exchange for income, while the 'product market' is where firms offer goods and services to households in exchange for consumer expenditure.