Question
Economics Question on Microeconomics
Identify the correct statement in the context of Circular Flow of Income in a two-sector economy:
A
Household receives factor services from firms
B
Household invests while firm saves
C
Firms produce goods and services
D
Household supplies factor services to Government
Answer
Firms produce goods and services
Explanation
Solution
In a two-sector economy, firms produce goods and services while households supply labor and other factors of production.