Question

The simple circular flow model shows that
A. total income received by households is different from the dollar value of all goods and services produced because the units of measurement are not the same.
B. total income received by households is less than the total value of goods and services produced because of leakages.
C. total income received by households is less than total payments to business because there are business profits.
D. total income received by households must be equal to the dollar value of all goods and services produced.

Answer 1

Answer:

D. total income received by households must be equal to the dollar value of all goods and services produced.

Explanation:

According to simple circular flow diagram, total income received by household should be equal to dollar value of goods and services produced, in simple words, flow in should be equal to flow out or leakages should be equal to injections.