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

question 32

Multiple Choice

In a simple circular-flow diagram, how are total income and total expenditures in an economy interrelated?

• A)They are equal because firms re-invest their revenue.
• B)They are equal only if there is no saving.
• C)They never equal because some people's income does not come from production activities.
• D)They are equal because every transaction has a buyer and a seller.

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