Figure 6-1 Shows the Circular Flow Model Where Only Consumption

question 95

Multiple Choice

Figure 6-1 shows the circular flow model where only consumption goods are being produced. Use the figure to answer questions .
Figure 6-1
-Refer to Figure 6-1. The arrow marked "D" represents the flow of:

• A) factors of production.
• B) factor incomes.
• C) personal consumption expenditures.
• D) consumer goods and services.

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Definitions:

Effective-Interest Method

A technique used in accounting to amortize the discount or premium on bonds payable over the life of the bonds more accurately than the straight-line method.

Bonds

Bonds are fixed-income securities that represent a loan made by an investor to a borrower, typically corporate or governmental, which pays periodic interest payments and the return of the principal at maturity.

Amortization

The gradual reduction of a debt or the spreading out of capital expenses for intangible assets over a specific period of time.

Accounting Period

The time frame in which financial transactions are recorded and reported, typically a fiscal year or quarter.