The circular flow diagram implies that if accounting is done correctly, ________
A) the flow of income must exceed the implied value of the factors of production
B) the implied value of the factors of production must exceed the flow of income
C) the flow of expenditure must equal the income of the households making those expenditures
D) the flow of expenditure must exceed the income of the households making those expenditures
C
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A theory of aggregate economic fluctuations called real business cycle theory holds that
A) changes in the real money supply are the only demand shocks that affect the natural rate of output. B) aggregate demand shocks do affect the natural rate of output. C) aggregate supply shocks do affect the natural rate of output. D) changes in net exports are the only demand shocks that affect the natural rate of output.
Economic models are built with
a. recommendations concerning public policies. b. facts about the legal system. c. assumptions. d. statistical forecasts.