Which Statement Best Characterizes the Money Held by Households in the Circular-Flow

question 83

Multiple Choice

Which statement best characterizes the money held by households in the circular-flow diagram?

• A) It is earned from the sale of factors of production.
• B) It becomes profit to firms.
• C) It originates mainly from international trade.
• D) It is used to purchase factors of production.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and operational efficiency.

Current Assets

Resources anticipated to be turned into cash, sold off, or used up within a year or over the course of the operational cycle, depending on which period extends further.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Accounts Receivable Turnover

A financial metric that measures how many times a company collects its average accounts receivable balance within a specific period.