When considering the circular flow of economic activity, households supply resources (inputs) such that the resources supplied by the households may be thought of as being provided in individual markets. Which of the following accurately describes this statement? Draw the circular flow diagram to illustrate your answer.

A. In the capital market, households loan accumulated savings to firms in exchange for labor income.

B. In the capital market, households loan inherited savings to firms in exchange for claims on past profits.

C. In the labor market, households earn wages by supplying labor to firms that demand it.

D. In the land market, households supply land or raw materials in exchange for claims on future profits.

C. In the labor market, households earn wages by supplying labor to firms that demand it.

Explanation:

The household offer their labor force and receive salaries or wages in exhcange from the company's

A. In the capital market, households loan accumulated savings to firms in exchange for labor income. FALSE

Makes no sense

B. In the capital market, households loan inherited savings to firms in exchange for claims on past profits. FALSE

The claim is no future profit. A company that had just started will need captial but has no previous profit. Also, if there is past profit first the company will use them and in their project and look for more capital once they are used entirely.

D. In the land market, households supply land or raw materials in exchange for claims on future profits. FALSE

The land market will receive a rent not a claim in profit.