Question

question 2 (10 points)
which of the following best characterizes the circular flow of income?
businesses buy resources from the government, and households buy goods and services from businesses.
businesses buy resources from households, and households use the money from the sale of resources to buy goods and services from businesses.
households buy factors of production from businesses, and businesses buy goods and services from households.
the government purchases resources from businesses and households and then sells goods and services to businesses and households.

Explanation:

The circular flow of income (in a basic two-sector model) describes the mutual exchange between households and businesses: households own the factors of production (resources) and sell them to businesses, then use the resulting income to purchase goods and services produced by businesses.

Answer:

Businesses buy resources from households, and households use the money from the sale of resources to buy goods and services from businesses.