According to the Circular-Flow Diagram GDP

question 26

Multiple Choice

According to the circular-flow diagram GDP

• A)can be computed as either the revenue firms receive from the sales of goods and services or the payments they make to factors of production.
• B)can be computed as the revenue firms receive from the sales of goods and services but not as the payments they make to factors of production.
• C)can be computed as payments firms make to factors of production but not as revenues they receive from the sales of goods and services.
• D)cannot be computed as either the revenue firms receive or the payments they make to factors of production.

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Definitions:

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income.

Balance Sheet

A report detailing a company's assets, liabilities, and equity of shareholders at a certain date.

Net Profit/Pretax Profit Ratio

A financial metric that compares the net profitability of a business to its earnings before taxes, indicating the portion of income retained after accounting for all expenses.

Leverage Ratio

A financial ratio that measures the amount of debt used in a company's financing structure relative to its equity or other assets.