If Some Income Earned by Households Is Not Spent on Output,or

question 52

Multiple Choice

If some income earned by households is not spent on output,or if some income earned by firms is not spent on factor services,the circular flow of income will

• A)stop.
• B)run over.
• C)expand.
• D)contract.
• E)explode.

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Definitions:

Productivity

A measure of the efficiency of production, often calculated as the ratio of outputs produced to inputs used in the production process.

Trade

The act of buying, selling, or exchanging commodities within domestic or international markets.

Mutually Beneficial

A scenario where all parties involved gain advantages or benefits from an arrangement or transaction.

Flexible Budget

A budget that adjusts or scales according to variations in actual activity levels or output, providing a more realistic comparison of costs and revenues.