The circular flow of income model shows that output, income and expenditure are equal to one another.

Name: The circular flow of income model shows that output, income and expenditure are equal to one another.
Brand: Quizplus
Rating: 4.9 (51 reviews)

Question

Quizplus · Accepted Answer

In the circular flow of income model, the total output produced by firms is equal to the total income earned by households, which in turn is equal to the total expenditure on goods and services. This demonstrates the equivalence of output, income, and expenditure in an economy.

The Circular Flow of Income Model Shows That Output, Income