The Circular Flow Diagram Shows That

question 79

Multiple Choice

The circular flow diagram shows that

• A)the total amount of income generated by the economy equals the total purchases of final goods and services.
• B)consumption expenditure equals saving.
• C)goods and factor markets are independent.
• D)the flow of payments to the factors used to produce goods and services exceeds the flow of payments for final goods and services.

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Definitions:

Fixed Asset Turnover Ratio

A financial ratio that measures a company's efficiency in using its fixed assets to generate sales.

Sales Earned

Income a company recognizes after delivering goods or services to a customer, reflecting actual earnings from sales.

Intangible Assets

Non-physical assets that have value, such as intellectual property, trademarks, goodwill, and brand recognition.

Amortization

The gradual reduction or the expensing of an intangible asset's cost over its useful life, similar to depreciation for tangible assets.