In the Circular Flow,how Are the "Value of Production," "Income

question 208

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)Once tax payments are subtracted at each stage,they are equal.
• C)Expenditures on GDP equals the value of production which equals income.
• 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 is smaller because households save some of their income and do not spend it.

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Definitions:

Liter

A metric unit of volume equal to one cubic decimeter or 1000 cubic centimeters, commonly used to measure liquids.

Volume

The amount of space that a substance or object occupies, or that is enclosed within a container.

Experiment

A scientific procedure undertaken to make a discovery, test a hypothesis, or demonstrate a known fact.

Hypothesis

A hypothesis is a proposed explanation made on the basis of limited evidence as a starting point for further investigation.