The concept that the aggregate value of goods and services produced in an economy keeps going round, either as factor payments, or as expenditures on goods and services, or as the value of aggregate production, is called:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Circular flow of income
The value of output keeps moving round between households and firms: as factor payments, as spending on goods, and as the value of production. This idea is the circular flow of income.
NCERT (2026-27): Glossary: “Circular flow of income – The concept that the aggregate value of goods and services produced in an economy is going around in a circular way. Either as factor payments, or as expenditures on goods and services, or as the value of aggregate production.” |