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 income generation	B. Flow of factor payments
3.	Phase of disposition	C. Process of value addition
4.	Money flow	D. The flow of goods and services
5.	Real flow	E. The 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-E, 3-A, 4-B, 5-D

Correct Answer:

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

Explanation:

The correct answer is Option 4: 1-C, 2-E, 3-A, 4-B, 5-D

1.	Phase of production	C. Process of value addition
2.	Phase of income generation	E. Distribution of income
3.	Phase of disposition	A. Consumption expenditure
4.	Money flow	B. Flow of Factor payments
5.	Real flow	D. The flow of goods and services

The circular flow of income has 3 phases:

The phase of production: C. Process of value addition: This phase involves adding value to raw materials to create finished goods.
The phase of Income generation: In this phase of circular flow, the households get factor payments (factor incomes). In this phase, there is generation/distribution of income as an outcome of production of goods and services. Thus, this phase involves distribution of factor payments. This phase involves consumption expenditure i.e. households with the help of factor payments buy goods and services produced in the phase of production.
The phase of disposition/Expenditure: A. Consumption expenditure: This phase is where goods and services are consumed, which corresponds to expenditure by consumers.

Real flow and money flow:

Money flow: It involves flow of factor payments and payments for goods and services between households and firms.
Real flow: It is the flow of goods and services across different sectors of the economy.