What is the relationship shown by the circular flow among income, total expenditure, and GDP?
What will be an ideal response?
They are all equal. The value of production, which is GDP, equals income because firms pay factors (income) the revenue they receive from selling the goods and services they produce (GDP). Next, the revenue that firms receive from selling the goods and services they produce (GDP) is equal to what is spent as expenditures on the goods and services. (total expenditure).
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To be part of the supply for a good, a producer must be
A) only willing to supply the good. B) only able to supply the good. C) both able and willing to supply the good. D) both able and willing to supply the good, and have already identified a buyer. E) both able and willing to supply the good, and have already sold the good.
Which of the following situations will arise in the domestic market following the imposition of a voluntary export restraint?
A) imports increase, domestic production increases, prices increase B) imports decrease, domestic production increases, prices increase C) imports decrease, domestic production increases, prices decrease D) imports increase, domestic production decreases, prices decrease