Multiple Choice
The simple circular-flow model for households and firms is an economic model that focuses on the interaction between households and firms. Which of the following statements regarding the model is correct?
A) As the model does not include the interaction between firms and resource markets, it does not predict correctly.
B) As the model does not include the interaction between households and product markets, it does not predict correctly.
C) The model has too many simplifying assumptions, and it cannot be used to make predictions about the real world.
D) The model is a simplification of the real world, and it can be used to make predictions about the real world.
E) As the model does not include the interaction between firms and product markets, it does not predict correctly.
Correct Answer:
Verified
Correct Answer:
Verified
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