In the Circular Flow Model, the Expenditures on Goods and Services

question 161

Multiple Choice

In the circular flow model, the expenditures on goods and services flow in the

• A)same direction as goods and services in all cases.
• B)same direction as factor markets.
• C)same direction as goods and services only if they both flow through the goods market.
• D)same direction as goods and services only if they both flow through the factor market.
• E)opposite direction as goods and services.

---

Definitions:

Fixed Expenses

Expenditures that stay unchanged despite differences in the volume of production or sales, covering items like rental fees, payroll, and coverage costs.

Sales

The exchange of goods or services for money, quantifying the performance and profitability of a business.

Operating Assets

Assets that are used for the day-to-day operations of a business, contributing to its ability to generate revenue.

Return On Investment

A measure of the financial gain or loss on an investment relative to the amount of money invested, usually expressed as a percentage.