Question

Which of the following is not a part of the Circular flow of Income in a closed economy?

• A. Firms
• B. Households
• C. Government
• D. Foreign Institutional Investors

Hint:

Closed economy = no foreign trade; open economy includes exports/imports and foreign investors.

Answer 1

The Correct Option is D

Step 1: Review the circular flow model in a closed economy.
- Key participants: Households, Firms, and the Government.
- In a closed economy, foreign entities are excluded; they are relevant in an open economy.