In the Circular Flow, How Are the "Value of Production

question 48

Multiple Choice

In the circular flow, how are the "value of production", "income", and "expenditures" related?

• A) They have no relationship to each other.
• B) Expenditures on GDP equal the value of production which equals income.
• C) Once tax payments are subtracted at each stage, they are equal.
• D) Once net exports of goods and services are subtracted from GDP, all three are equal.
• E) Value of production always equals income but expenditures are smaller because households save some of their income and do not spend it.

---

Definitions:

Phonological Loop

A component of working memory responsible for the temporary storage and manipulation of verbal and auditory information.

Working Memory

A form of short-term memory that involves the temporary holding, processing, and manipulation of information for cognitive tasks.

Short-Term Memory

The capacity for holding a small amount of information in an active, readily available state for a short period.

Context-Dependent Memory

The principle that recall of information is easier when in the same context or environment where the memory was originally formed.