Which of the following best describes the circular flow model?

A) The model represents the movement of money throughout the economy.
B) The model represents the interactions within sectors.
C) model represents the flow of goods and services between sectors.
D) The model represents the changing relationships between actors.

The circular flow model, also known as circular flow income, is a model which represents the interdependence of the relationships between the actors in macroeconomics: businesses, households, and government. The model shows how goods and services are exchanged for money, creating flows in the economy with exchanges that correspond in value.

Tundexi Tundexi · Answer 2 · 2022-04-27T12:34:49+02:00

The statement that best describes the circular flow model is that its represents the movement of money throughout the economy.

What is a circular flow model?

This is an economic model that shows the interdependence of the relationships between businesses, households and government in an economy.

Its representation depicts the flow of goods and services and how it is exchanged for money, thereby, creating flows in the economy with exchanges that correspond in value.

Therefore, the Option A is correct.