Which of the following statements about the circular flow diagram is not correct?
A)Households receive income from the resource market;they save some of it and spend the rest of it on domestic or foreign goods and services.
B)The loanable funds market takes net household savings and channels it in part to the government and in part to businesses for investment.
C)Expenditures on GDP are equal to consumption plus government purchases plus investment plus net exports (exports minus imports).
D)The net inflow of capital from foreign economies must always be positive and equal to the amount of business investment.

Question

Quizplus · Accepted Answer

The net inflow of capital from foreign economies can be either positive or negative, depending on whether a country is a net lender or a net borrower in the international financial markets. Therefore, it does not always have to be positive and equal to the amount of business investment.

Which of the Following Statements About the Circular Flow Diagram