The circular flow diagram is best described as a(n)
A)abstraction of little value in macroeconomics.
B)exact representation of the cause and effect relationship between spending and employment.
C)model that clarifies the relationship between spending and income.
D)model to explain the relationship between the federal deficit and tax revenues.

Question

Quizplus · Accepted Answer

The circular flow diagram is a model used to help understand the relationship between spending and income, as it depicts the flow of money and resources between households and businesses. It is a simplified representation, but it can still provide useful insights into the overall functioning of the economy.

The Circular Flow Diagram Is Best Described as A(n)