How does the circular flow model represent the interactions between households and firms? The model shows that households do not benefit from firms. The model shows that firms do not benefit from households. The model shows that firms and household benefit from one another. The model shows a lack of dependence within the economy.

The circular flow model defines the interactions between households and firms The model shows that firms and household benefit from one another.

The circular flow model illustrates the interaction between two groups of economic decision-makers—households and businesses—and two types of economic markets—the market for resources and the market for goods and services. While the entire economy is much more complex, the simple circular flow model is reasonable for understanding some key economic relationships.

What are the two groups of economic decision makers?

The circular flow model shows the interaction between two batches of economic decision-makers—households and businesses—and two types of economic markets—the market for resources and the market for goods and benefits.

What are the economic decisions?

Economic decisions involve production, distribution, exchange, consumption, saving, and investment of economic resources. Personal and Public Goals. Economic decisions are created to serve the goals of individuals and personal organizations (private goals) and society as a whole (public goals).

What are the three types of economic decisions?

There are three main types of economies: free market, command, and mixed. free-market and command economies; mixed economies are a combination of the two. Individuals and businesses make their own economic decisions. The state's central government creates all of the country's economic determinations

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