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.

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Definitions:

Roman Numerals

A numerical system originating from ancient Rome, using combinations of letters from the Latin alphabet (I, V, X, L, C, D, M) to represent numbers.

Transition

The process or period of change from one state or condition to another.

Tabulations

The systematic arrangement of data in rows and columns, usually for the purposes of analysis or presentation.

Active Voice

A sentence construction in which the subject performs the action expressed by the verb, focusing attention on the doer of the action.