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:

Income

The reward garnered over time, generally in a consistent pattern, from occupational or investment sources.

Expected Utility Function

A concept in economics that predicts the utility or satisfaction a rational individual expects to receive from different outcomes, used in decision making under uncertainty.

Sure Payment

A guaranteed payment, often referring to financial transactions where the payer is obligated to pay a certain amount.

Lottery

A form of gambling which involves drawing lots for a prize, often administered by state or federal governments.