The concept of 'Circular Flow of Income' is associated with:
A. Macroeconomics
B. Microeconomics
C. Development economics only
D. International economics
Answer: Option A
Solution (By JKSSB Mock Tests)
The circular flow of income is a macroeconomic concept that shows the continuous movement of goods, services and money between households, firms, government and the external sector.
Explanation:
Friedman’s restatement treats the demand for money as a stable function of permanent income, interest rates and other variables, implying that velocity, while not constant, is predictable.
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