Expenditure on goods and services goes back to the _____ in the form of receipts from their sales.
Which of the following options suits best in the above blank?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Producers
Households spend their income on goods made by firms. This spending reaches the producers as their sales revenue.
NCERT (2026-27): “2.2 Circular Flow of Income and Methods of Calculating National Income … The aggregate consumption by the households of the economy is equal to the aggregate expenditure on goods and services produced by the firms in the economy. The entire income of the economy, therefore, comes back to the producers in the form of sales revenue. …” |