The circular flow of income can best be characterized by the statement: b) Businesses buy resources from households and households use their income for goods and services from businesses.
In this model, households provide factors of production—like labor, land, and capital—to businesses. In return, businesses pay households in the form of wages, rent, and dividends, which constitutes the income received by households. This income is then used by households to purchase goods and services produced by the businesses. This continuous cycle illustrates the interdependence between businesses and households within an economy.