Equilibrium in the circular flow of income occurs when ?
Correct answer: A. Injections = withdrawals
- A. Injections = withdrawals
- B. There is a Bank Holiday
- C. Injections withdrawals
- D. None of these
Explanation
Circular-flow equilibrium requires total injections, including investment and government spending, to equal total withdrawals, including saving and taxes. If they differ, national income changes until equilibrium is restored.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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