Figure 2-2 -Refer to Figure 2-2.Boxes a and B of This Circular-Flow

question 143

Multiple Choice

Figure 2-2
-Refer to Figure 2-2.Boxes A and B of this circular-flow diagram represent

• A)firms and households.
• B)households and government.
• C)the markets for goods and services and the markets for financial assets.
• D)the markets for goods and the markets for services.

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Definitions:

Consumption Expenditures

Spending by households on goods and services, excluding new housing.

Value Added

Describes the additional worth created at each stage of production or distribution, calculated as the difference between the cost of inputs and the price of outputs.

Transaction Costs

Expenses incurred during the process of buying or selling goods or services, not including the price of the products themselves.

Product Manufactured

Goods that have been created through a process of transformation from raw materials to finished items.