Question : In the circular flow of income ________ are the owners of factor of production and _______ produces goods and services.
Option 1: Households, firms
Option 2: Firms, households
Option 3: Government, firms
Option 4: Foreign sector, government
Answer (1)
21st Jan, 2024
Correct Answer: Households, firms
Solution :
Households are the owners of factor of production. Firms hire these factor of production and produces goods and services. In return firms make factor payments to the households and households make consumption expenditure.
Hence, Option A is correct.
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