In the US Economy, the Circular-Flow Diagram Does NOT Illustrate

question 6

Multiple Choice

In the U.S. economy, the circular-flow diagram does NOT illustrate:

• A) growing income inequality.
• B) flows of money.
• C) flows of goods and services.
• D) the purchase and sale of factors of production.

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Definitions:

Unearned Revenues

This reflects money received by a company for goods or services yet to be provided.

Retained Earnings

The portion of net income that is kept within the company rather than distributed to its shareholders as dividends.

Prepaid Rent

Payments made in advance for rent on a property or space that is to be used in the future, recorded as an asset on the balance sheet until the period to which the payment applies passes.

Sales Revenue

The total income a company generates from selling its goods or services before any costs or expenses are subtracted.