Which one of the following is an example of the circular flow model and shows the interdependence of households and firms?
A. Households demand their resources from the firms in the factor markets and, in turn, supply in the product market the goods and services produced by firms.
B. The firms go to the resource market to supply resources that households demand and, in turn, provide households with the goods and services produced for the product markets.
C. Households supply their resources to the firms in the factor markets and, in turn, demand in the product market the goods and services produced by the firms.
D. The firms in the factor markets pay to households in the form of wages, interest, rent and profit?for resources demanded.
Answer: C
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