Because of the circular flows of expenditure and income in the economy,total ________ equals total ________ equals total ________.
A)expenditure;investment;income
B)expenditure;income;value of production
C)consumption;expenditure;value of production
D)investment;income;consumption
E)consumption;investment;expenditure

Question

Quizplus · Accepted Answer

The circular flow model shows that firms earn income by selling their goods and services to households, which in turn spend their income on these goods and services. This creates a loop of expenditure and income, with the total expenditure by households equaling the total income earned by firms. Additionally, the value of production is equal to both the total expenditure and total income, as it represents the sum of all goods and services produced in the economy. Therefore, the correct answer is B, as total expenditure equals total income equals the value of production.

Because of the Circular Flows of Expenditure and Income in the Economy,total