Question

In the circular flow model, ______ (households, firms, gov agencies, states) must buy resources to produce goods to sell to ________

Answer 1

In the circular flow model, firms buy resources needed for production from households, and in turn, sell goods and services back to households.

Step-by-step explanation:

In the circular flow model, firms must buy resources to produce goods to sell to households. Firms are the businesses responsible for the production of goods and services within an economy. They acquire resources such as labor, capital, and raw materials from households in the Resource Market.

These resources are then utilized to produce goods and services, which firms offer in the Product Market. Conversely, households supply labor and other resources in the Resource Market, earning income that they use to purchase goods and services from firms in the Product Market. This interaction creates a continuous flow of money and resources between firms and households.

Answer 2

In the circular flow model, firms must buy resources to produce goods to sell to households.