The Circular Flow Diagram Is Best Described as A(n)

question 193

Multiple Choice

The circular flow diagram is best described as a(n)

• A)abstraction of little value in macroeconomics.
• B)exact representation of the cause and effect relationship between spending and employment.
• C)model that clarifies the relationship between spending and income.
• D)model to explain the relationship between the federal deficit and tax revenues.

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Definitions:

Income Mobility

The ability of individuals or households to move up or down the income distribution over a period of time.

Lorenz Curve

A graphical representation showing the distribution of income or wealth within a society, indicating inequality.

Income Inequality

The uneven distribution of income within a population, often measured by various statistical means.