The Figure Given Below Represents the Circular Flow of Income

question 63

Multiple Choice

The figure given below represents the circular flow of income between households, firms, financial intermediaries, and foreign countries.
Figure 4.2

-Refer to Figure 4.2. Assume investment spending decreases by $4,000. Everything else being the same, what must be the new value of net trade flows in order to maintain total expenditures on business firms' output at $35,000?

• A) -$2,500
• B) -$1,500
• C) $3,500
• D) $6,500
• E) $7,500