Circular Flow of Income Model Quiz

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Questions and Answers

What is the circular flow of income?

The circular flow of income is a model of the economy representing the flows of money, goods, and services between economic agents.

Who developed the concept of the circular flow?

The idea of the circular flow was present in the work of Richard Cantillon, and François Quesnay developed and visualized this concept in the Tableau économique.

What is the basis of national accounts and macroeconomics?

The circular flow analysis is the basis of national accounts and macroeconomics.

What is the significance of the circular flow of income?

<p>It is a concept for better understanding of the economy as a whole and is used in the National Income and Product Accounts (NIPAs).</p> Signup and view all the answers

How is the circular flow of income represented in a simple economy?

<p>In a simple economy, individuals provide labor enabling businesses to produce goods and services, which is represented in a circular flow diagram.</p> Signup and view all the answers

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