Figure 6-2 Shows a Spending Flow Model Where Both Consumption

question 31

Multiple Choice

Figure 6-2 shows a spending flow model where both consumption and investment goods are being produced. Use the figure to answer questions .
Figure 6-2
-Refer to Figure 6-2. A New York restaurant purchases 1,000 cases of wine from a winery in France. This transaction is recorded as part of:

• A) gross private investment and the flow is represented by 2.
• B) net exports and the flow is represented by 4.
• C) consumption expenditure and the flow is represented by 1.
• D) consumption expenditure and the flow is represented by 4.

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Definitions:

Rental Property

Real estate property that is leased or rented out to tenants, generating income for the owner.

Return Requirement

The minimum expected rate of return necessary for an investment to be considered worthwhile by an investor, reflecting the risk level.

Annual Cash Flows

The total amount of money being transferred into and out of a business over the course of a year, indicative of its operational efficiency and profitability.

Ordinary Annuity

A series of equal payments made at the end of consecutive periods over a fixed length of time.