Which of the Following Statements About the Circular Flow Diagram

question 239

Multiple Choice

Which of the following statements about the circular flow diagram is not correct?

• A)Households receive income from the resource market;they save some of it and spend the rest of it on domestic or foreign goods and services.
• B)The loanable funds market takes net household savings and channels it in part to the government and in part to businesses for investment.
• C)Expenditures on GDP are equal to consumption plus government purchases plus investment plus net exports (exports minus imports).
• D)The net inflow of capital from foreign economies must always be positive and equal to the amount of business investment.