In a Circular Flow Diagram, I) the Value of Production

question 231

Multiple Choice

In a circular flow diagram, i) the value of production = income
Ii) the value of production = expenditure
Iii) expenditure = income

• A)i, ii and iii are true statements.
• B)Only iii is a true statement.
• C)i and ii are true statements.
• D)i and iii are true statements.
• E)Only i is a true statement.

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Definitions:

Inputs Fixed

Refers to factors of production (like capital and land) that remain constant in quantity, regardless of the level of output.

Inputs Variable

Factors of production such as labor, land, and capital that are used to create goods and services.

Long-Run Adjustment

A process businesses undergo to alter their level of output in response to economic changes, ensuring long-term economic efficiency and resource allocation.

Assembly-Line

A manufacturing process in which parts are added to a product in a sequential manner to create a finished product more efficiently.