According to the circular flow model,an increase in spending by businesses on productive resources would cause the income and spending of consumers to increase.

Question

Quizplus · Accepted Answer

An increase in spending by businesses on productive resources would lead to an increase in the demand for those resources, which would increase wages and employment of consumers. This increase in income would then lead to an increase in their spending, according to the circular flow model.

According to the Circular Flow Model,an Increase in Spending by Businesses