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SOLVED: The circular-flow model The following diagram represents a set of arrows (shown in red) that illustrate the flow of goods, services, and factors of production in the economy. Markets for Goods and Services Firms Households Markets for Factors of Production In the product market, households purchase goods and services from firms. In return, firms receive revenue from the sale of these goods and services. In the factor market, firms hire households as workers and pay them wages. House
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