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JAMB Economics 1989 Question 1

Question 1

National Income

In its simplified form, the circular flow of income concept refers to the

  1. A.real flow in goods and services between the product and factor markets
  2. B.monetary payments for goods and services produced by individual firms
  3. C.transactions in goods and services and payments for such transactions between individual firms and households
  4. D.money flows associated with transactions between individual firms and households.
Show the answer and explanation

Answer: C (transactions in goods and services and payments for such transactions between individual firms and households)

Explanation

The simple circular flow shows goods, services and factors moving between households and firms, and the money payments flowing the opposite way.