Match the following. 1. Phase of

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Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Introduction

Question:

Match the following.

1.	Phase of production	A.	consumption expenditure
2.	Phase of disposition	B.	factor payments
3.	Phase of generation	C.	process of value addition
4.	Money flow	D.	the flow of goods and services
5.	Real flow	E.	distribution of income

Options:

1-A, 2-B, 3-E, 4-C, 5-D

1-C, 2-A, 3-B, 4-D, 5-E

1-D, 2-A, 3-E, 4-C, 5-B

1-C, 2-A, 3-E, 4-B, 5-D

Correct Answer:

1-C, 2-A, 3-E, 4-B, 5-D

Explanation:

The circular flow of income has 3 phases:

The phase of production: This phase involves value addition in the goods and services.
The phase of generation: This phase involves distribution of factor payments.
The phase of expenditure: This phase involves consumption expenditure i.e. households with the help of factor payments buy goods and services produced in the phase of production.

Real flow and money flow:

Real flow: It is the flow of goods and services across different sectors of the economy.
Money flow: It involves flow pf factor payments and payments of goods and services.