In the circular flow model, the value of total income for an economy ________ the value of total production.

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Quizplus · Accepted Answer

According to the circular flow model, the total income generated in the economy is equal to the total production. This is because every time a good or service is produced, income is generated for the factors of production (land, labor, capital, and entrepreneurship) involved in producing it. This income is then used to purchase other goods and services, creating a continuous cycle of production and consumption, with income and expenditure being equal in value. Therefore, the value of total income for an economy equals the value of total production.

In the Circular Flow Model, the Value of Total Income