The underlying principle of the circular-flow diagram is that the flows of money into each sector or market in the economy are greater than those coming out of the sector or market.

Question

Quizplus · Accepted Answer

The underlying principle of the circular-flow diagram is that there is a continuous flow of goods, services, and factors of production between households and firms, which creates a circular flow of income and spending in the economy. This flow is balanced, with money flows into a sector or market being equal to money flows out of that sector or market. Therefore, option B is the correct answer.

The Underlying Principle of the Circular-Flow Diagram Is That the Flows