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2 years ago

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

Business

1 answer:

Lana71 [14]2 years ago

5 0

Households would provide factors of production to firms.

The circular flow demonstrates the movement of money in the economy.
The two-sector model of circular flow comprises households and firms.
Money first flows from producers to households in return for production services in the form of wages.
Finally, return to producers back in the form of payment for the purchase or expenditure made by households.

<h2>What do you mean by circular flow of money?</h2>

The circular flow model demonstrates how money moves through society.
Money flows from producers to workers as wages and flows back to producers as payment for products.
In short, an economy is an endless circular flow of money.

<h2>What are the two types of circular flow?</h2>

There are two types of circular flow:

Real flow: The term real flow means the flow of factor services from households to firms.
Similarly, the flow of goods and services from firms to households.
Money flow: The money flow refers to the flow of factor payments from firms to households for factor services.

Learn more about the circular flow of money here:

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