​Which of the following statements is NOT true about the two-sector model?​

Correct option is B

• In a two-sector model, the economy is simplified to include only two sectors: households and firms.
• The government sector, foreign sector, and other complexities are not considered in this basic model.
• Therefore, the government sector does not play an important role in this model.

Here are some other facts about the two-sector model:

·        In a two-sector economy, the GNP and GDP are equal because there is no foreign sector. 

• In the two-sector model, households supply factors of production to firms, such as labor and entrepreneurial ability. 
• In the two-sector model, households spend all their incomes on consumer expenditures, purchasing goods and services from businesses. 
• The Net Factor Income from abroad is always zero in a two-sector economy because there are no foreign transactions.