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In a two sector economy, the… (Class 12 Economics 2026, Q1)

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EconomicsCBSE Class 12 · Board exam 2026, set 58/1/1 · 1 mark · MCQ

CBSE Class 12 Economics 2026: question 1

Set in the CBSE Class 12 board exam of 2026, paper 58/1/1, section A, question 1, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q1 · 1 mark · MCQNational Income Accounting

In a two sector economy, the flow of factor payments moves from __________ to __________. (Choose the correct option to fill in the blanks)

  1. (A)firms, households
  2. (B)firms, government
  3. (C)banks, households
  4. (D)households, firms

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 58/1/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

Who owns the factors of production in a two-sector economy?

Hint 2

Factor payments go to whoever supplies the factor services.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. In the two-sector circular flow, households own the factors of production (land, labour, capital, enterprise) and sell their services to firms. Firms pay rent, wages, interest and profit in return.

  2. So factor payments flow from firms to households (and household consumption spending flows back from households to firms). Option (A).

    1 mark

Answer: (A) firms, households

Where the marks are

  • Direction of factor payments in the two-sector model (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from National Income Accounting, one at a time, marked against the answer key and marking points.Back to the full paper2026 board paper, set 58/1/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.