In the national accounting framework, saving by households increases the flow of income but investment by business reduces the flow of income.

Question

Quizplus · Accepted Answer

In the national accounting framework, saving by households does not directly increase the flow of income; it represents income not spent on consumption. Investment by businesses, on the other hand, is an expenditure that contributes to the flow of income by creating demand for goods and services, thus stimulating production and income generation.

In the National Accounting Framework, Saving by Households Increases the Flow