The circular flow model is built on the idea of equality between national income and national expenditures.

Question

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The circular flow model is based on the concept that national income is equal to national expenditure, which in turn equals national output or production. The model shows how goods and services flow between households, firms, and the government, and how money flows in the opposite direction to pay for those goods and services.

The Circular Flow Model Is Built on the Idea of Equality