Which of the following earns money (income) and spends it on services and goods?

Households

The correct answer is Option 4: Households

Households earn income primarily through wages, salaries, and other forms of compensation for labor or investment. They then spend this income on goods and services for their consumption. This is a fundamental concept in economics, where households are considered the primary consumers in the economy.

In four sector circular flow model, we have firm, households, government and foreign sector. This eliminates the options of hospitals and businesses. Out of firms and households, firm have the function of production and households perform function of consumption of goods and services. Hence, households will be the answer.