The Circular Flow Diagram Illustrates the Expenditures Made by

question 100

Multiple Choice

The circular flow diagram illustrates the expenditures made by

• A)households only.
• B)households and firms only.
• C)households and investors only.
• D)firms, households, and governments only.
• E)households, firms, governments, and the rest of the world.

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Definitions:

Traditional Format Income Statement

A financial statement format that separates operating activities from non-operating activities to reveal gross profit, operating income, and net income.

Contribution Format Income Statement

An income statement format that separates variable and fixed costs, making it easier to see the contribution margin.

Contribution Margin

The revenue remaining after deducting variable costs, which contributes to covering fixed costs and generating profit.

Direct Manufacturing Cost

Expenses directly associated with the production of goods, including direct materials and direct labor costs.