In the Markets for the Factors of Production in the Circular-Flow

question 160

Multiple Choice

In the markets for the factors of production in the circular-flow diagram,

• A)households are sellers and firms are buyers.
• B)households are buyers and firms are sellers.
• C)households and firms are both buyers.
• D)households and firms are both sellers.

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Definitions:

Adjusted Basis

Adjusted Basis is the value of an asset for tax purposes, adjusted for factors like depreciation or improvement costs, used to determine the gain or loss on the asset's sale.

Outside Basis

It refers to the tax basis, or the value of an individual's investment in an entity like a partnership or S corporation, outside of the company's own assets.

Contributed Property

Assets or property given to a charitable organization, potentially eligible for a tax deduction based on the property's fair market value.

Partnership Formation

The process of creating a partnership, which involves two or more parties joining together to carry on a trade or business, with each contributing money, property, labor, or skill.