Which of the following is not part of the simple circular flow model?
business
government
firms
households

The correct answer is B. Government

Explanation:

There is no doubt that the simple circular flow model explains supply and demand in an elemental economic perspective, however this model doesn’t take into account at least five other key factors of the economic systems.  Those factors are:  

1. Government sector.

2. Government spending.

3. The taxation system.

4. The financial institutions.

5. Imports and exports.

The correct answer is B. Government.

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