One major lesson that we learn from the circular flow diagram is that:

Question

Quizplus · Accepted Answer

The circular flow diagram shows that the money flows continuously between households, firms, and the government. In this flow, the total income in the economy must always equal total spending because every dollar spent by one group becomes income for another group. Therefore, choice A is the correct answer. Choices B and C are not universally true and do not apply to the entire economy.

One Major Lesson That We Learn from the Circular Flow