Which of the following best describes the circular flow model?

The model represents the movement of money throughout the economy.

The model represents the interactions within sectors.

The model represents the flow of goods and services between sectors.

The model represents the changing relationships between actors.

The Answer is - The model represents the movement of money throughout the economy.

Question

Hudson Buckley

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9 January, 14:36

Which of the following best describes the circular flow model?

The model represents the movement of money throughout the economy.

The model represents the interactions within sectors.

The model represents the flow of goods and services between sectors.

The model represents the changing relationships between actors.

The Answer is - The model represents the movement of money throughout the economy.

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Answers (1)

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Ian · Answer 1

The circular flow model is a model of the economy used to represent the monetary transactions in an economy. The flow can be 1. flow of physical things (goods) or 2. flow of money.

The pattern of the flow is: Production → Income → Expenditure → Production.

From the given options the best that describes the circular flow model is:

The model represents the movement of money throughout the economy.

because the model includes the movement of all money (household, companies ...) throughout the company.