The circular flow shows that national income can be measured in three ways because

households, firms and the government each keep separate accountsCorrect answerYour answerthere are three factors of productionCorrect answerYour answerthe value of output, the incomes paid out and the spending on output are all the same totalCorrect answerYour answerincome is counted three timesCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

Firms' sales revenue is paid out as factor incomes, and those incomes are spent on firms' output.
Measuring at any point of the circle, product, income or expenditure, gives one total.

Concept: Three points of measurement
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe circular flow of income

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The circular flow shows that national income can be measured in three ways because

Explanation