The chart that shows the flow of money and resources through the economy is the

• A. Product cycle model
• B. Circular flow model
• C. Macro model of growth
• D. Flow diagram of the economy

Answer: (B)

The circular flow model is the diagram that shows how money and resources move through an economy. In the simplest version, households provide the factors of production—like labor and capital—to firms, and in return they receive income (wages, rent, profits). Firms use those resources to produce goods and services, which are then bought by households with the income they earned. Money and resources flow in two directions: real resources move from households to firms, and payments move from firms to households; at the same time, money flows from households to firms as they purchase goods and services. This two-way flow captures the ongoing exchange that drives an economy. Extended versions add government, financial sectors, and foreign trade to show injections and leakages, but the core idea remains the same. The other options don’t specifically describe this continuous money-and-resources loop in the economy.