The circular flow of income involves the idea that
A) in every economic exchange one party takes advantage of the other party.
B) the seller of a good receives less than the buyer spends.
C) the seller of a good receives more than the buyer spends.
D) the seller of a good receives exactly the same amount as the buyer spends.

Question

Quizplus · Accepted Answer

The circular flow of income shows how income flows through an economy. It involves the idea that in every economic transaction, the seller of a good or service receives exactly the same amount as the buyer spends. This is because every transaction involves both a buyer and a seller, and the money spent by the buyer becomes income for the seller. Therefore, the total amount of income generated by the economy is equal to the total amount spent by consumers on goods and services.

The Circular Flow of Income Involves the Idea That