Which idea does the circular flow model illustrate?
A) Every expenditure someone makes in an economy is exactly equal to another individual's income.
B) Only two markets exist in every economy-input and output.
C) Income is lower when there is more spending on services compared to goods.
D) The flow of two things in the economy-production and money-travel in the same direction.

Question

Quizplus · Accepted Answer

The circular flow model illustrates the idea that every expenditure someone makes in an economy is exactly equal to another individual's income. This is demonstrated by the continuous flow of money and goods/services between households and businesses.

Which Idea Does the Circular Flow Model Illustrate