The circular flow model illustrates: how models can be more complex than reality. O how inputs, goods and services, and money flow through the economy. O how correlation does not imply causation. O how the economy can operate most efficiently.
Answer
The circular flow model illustrates the economic relationships
amongst all players in the economy: firms, households,
goods-and-services markets, government, factors market and foreign
market. It denotes how money flows from producers to workers as
wages and flows back to producers as payments for products.
Therefore the correct response is the second one:
how inputs, goods and services, and money flow through
the economy.
