The total expenditure on goods and services in a country must be the same as the total income earned from selling goods and services because:

Question

Quizplus · Accepted Answer

This is because every expenditure by one sector becomes income for another sector. This creates a cycle of spending and income generation in the economy, where the total expenditure equals the total income earned. This is known as the circular flow of income and expenditure. The other options are not relevant to the concept of the circular flow of income and expenditure.

The Total Expenditure on Goods and Services in a Country