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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