Study the diagram below on the circular flow of income and identify what is represented by letters a, b and c.

Here's the identification for the circular flow of income diagram:

a) This arrow represents the money flow from households to firms for the purchase of goods and services.

b) This arrow represents the real flow of goods and services from firms to households.

c) This arrow represents the real flow of factors of production (like labor, land, capital) from households to firms.

Therefore:
a. Expenditure on goods and services (or Consumption expenditure)
b. Goods and services
c. Factors of production (or Factor services)