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JAMB Economics 1988 Question 44

Question 44

National Income

Which of the following occurs in the circular flow of economic activities with no leakages?

  1. A.Consumption equals saving
  2. B.Saving equals investment
  3. C.Imports equal exports
  4. D.National income equal national expenditure.
Show the answer and explanation

Answer: D (National income equal national expenditure.)

Explanation

If nothing leaks out of the circular flow (no saving, taxes or imports), all income earned is spent again, so national income equals national expenditure.