In the circular flow, the part in which businesses sell goods and services to households and the government is called the: a.  goods market b.  factor market c. capital market d.  money market

Expert Answers

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Of the choices given here, the best choice is A, the goods market.  The exact name of this market will vary from diagram to diagram, but “goods market” is the only one of the choices given that can be correct.

The circular flow diagram is meant to show that all parts of the economy are related to and connected to one another.  Firms sell goods and services to households and the government.  This is called the goods market or the product market.  At the same time, households sell labor and other resources to the firms in the resources market this completes the circular flow.

Therefore, A is the best answer here.

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