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Using the Simple Circular Flow Model, Explain Why the Sum

question 61

Essay

Using the simple circular flow model, explain why the sum of income earned in an economy equals the sum of spending in the economy.


Definitions:

Economy

A system of production, distribution, and consumption of goods and services among a group of people.

Opportunity Cost

The detriment of not pursuing the second-top option when engaging in decision-making.

Manufacturing

The process of using machines, tools, and labor to produce goods for use or sale.

Export

Goods or services sold by a country to buyers in another country.

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