According to the circular flow, the value of total output produced and total income
A) should differ by the value of intermediate goods.
B) should increase by the unanticipated rate of inflation.
C) will always be different by the amount of firm profits
D) will be equal.

Question

Quizplus · Accepted Answer

According to the circular flow model, the total value of output produced equals the total income generated in the economy. This is because every dollar of expenditure made by households for buying goods and services becomes income for the firms producing those goods and services. Therefore, the value of total output produced and total income earned will always be equal.

According to the Circular Flow, the Value of Total Output