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

question 76

Multiple Choice

In a simple circular-flow diagram, how are total income and total expenditure interrelated?

• A)They are seldom equal because of the dynamic changes that occur in an economy.
• B)They are equal only when all goods and services produced are sold.
• C)They are always equal because every transaction has a buyer and a seller.
• D)They are always equal because of accounting rules.

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Definitions:

Average Sales

The mean amount of sales over a certain period, calculated by summing all sales figures and dividing by the number of sales transactions.

Critical Value

A point on the scale of the test statistic beyond which we reject the null hypothesis; it marks the threshold for significance in hypothesis testing.

P-value

The odds of receiving outcomes in a test that are equally or more extreme than those observed, given the null hypothesis is assumed to be accurate.

Level of Significance

A threshold in statistical hypothesis testing below which a result is considered statistically significant.