In a Simple Circular-Flow Diagram, How Are Total Income and Total

question 76

Multiple Choice

In a simple circular-flow diagram, how are total income and total expenditure interrelated?

• A)They are seldom equal because of the dynamic changes that occur in an economy.
• B)They are equal only when all goods and services produced are sold.
• C)They are always equal because every transaction has a buyer and a seller.
• D)They are always equal because of accounting rules.

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Definitions:

Arousal

A physiological and psychological state of being awake, alert, and engaged; often associated with motivation, attention, and readiness for activity.

Novelty

The quality of being new, original, or unusual.

Uncertainty

The state of being unsure or having doubts about a situation or outcome, often leading to anxiety or indecision.

Hedonic Theory

A psychological theory suggesting that individuals are motivated by the pursuit of pleasure and the avoidance of pain.