Figure 2-2 -Refer to Figure 2-2.If Box a of This Circular-Flow Diagram

question 69

Multiple Choice

Figure 2-2
-Refer to Figure 2-2.If Box A of this circular-flow diagram represents firms,then which box represents households?

• A)Box B
• B)Box C
• C)Box D
• D)Any one of the other boxes (B,C,or
• D)could represent households.

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Definitions:

Fixed Expenses

Costs that do not change in total despite fluctuations in business activity levels or volume, such as rent or salaries.

Percentage of Sales Approach

A method for forecasting financial needs based on a fixed percentage of projected sales, often used in budgeting and financial planning.

Profit Margin Percentage

A profitability ratio calculated by dividing net income by revenue, expressing the result as a percentage.

Plowback Ratio

The proportion of earnings retained by a business, rather than distributed to its shareholders as dividends, to reinvest in the core business or to pay debt.