The circular flow model examines interactions between which two groups? A. households and firms
B. households and consumers
C. firms and producers
D. firms and government
The circular flow model examines interactions between which two groups?
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The correct answer is A. households and firms.
The circular flow model illustrates how goods and services flow between households and firms in an economy. Households provide factors of production (such as labor) to firms, and in return, firms provide goods and services to households. This interaction forms the basis of economic activity and demonstrates how money moves throughout the economy.
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