Question

Which choice correctly describes activity in the circular flow?

Answer 1

In economics, a circular flow model is a diagram that is used to represent the monetary transactions in an economy.
There are two flows present within the model including flows of physical things (goods or labor) and flows of money (what pays for physical things).The circular flow of income follows a specific pattern: Production → Income → Expenditure → Production.The production possibility frontier can be used to illustrate the circular flow model.Economists use data, statistics, and natural experiments in order to make economic "laws" that explain general patterns..