Which of the following will invariably be illustrated by a circular flow of income diagram?
A)The value of foreign net output
B)Trade deficit always equals payments for resource services
C)The value of output is equal to income
D)The value of private production always equals the value of household income
E)The value of net exports is positive

Question

Quizplus · Accepted Answer

The circular flow of income diagram illustrates the flow of income through the economy. In this diagram, the value of output is equal to income because firms receive payments for their output, which becomes household income. Households, in turn, use this income to purchase goods and services from firms, completing the circular flow. The other options are not necessarily always illustrated by a circular flow diagram.

Which of the Following Will Invariably Be Illustrated by a Circular