ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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only i is true statement.
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i and ii are true statements.
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only iii is a true statement.
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i and iii are true statements.
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i, ii, and iii are true statements.
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Detailed explanation-1: -What is Circular Flow of Income? The circular flow means the unending flow of production of goods and services, income, and expenditure in an economy. It shows the redistribution of income in a circular manner between the production unit and households. These are land, labour, capital, and entrepreneurship.
Detailed explanation-2: -The circular flow diagram illustrates the interdependence of the “flows, ” or activities, that occur in the economy, such as the production of goods and services (or the “output” of the economy) and the income generated from that production.
Detailed explanation-3: -In the basic (two-factor) circular flow model, money flows from households to businesses as consumer expenditures in exchange for goods and services produced by the businesses, then flows back from businesses to households for the labor that individuals provide.
Detailed explanation-4: -In this model, we introduce the government sector as well that purchases goods from firms and factors services from households. Between households and the government money flows from govemment to the household when the govemment makes transfer payments.