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The ________ simplifies the interaction of two groups, firms and households, and allows us to make predictions about economic behavior.
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The ________ simplifies the interaction of two groups, firms and households, and allows us to make predictions about economic behavior.

User Eldiyar Talantbek
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Answer:

Circular flow diagram.

Step-by-step explanation:

The circular flow diagram simplifies the interaction of two groups, firms and households, and allows us to make predictions about economic behavior.

The firm sells their goods and services in the market while the household buys these goods and services.

Hence, the circular flow diagram represents the interaction between the household and firms with respect to the market.

User Michael Kunst
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