In the Simple Circular flOw of Income Where There Are

question 22

Multiple Choice

In the simple circular flow of income where there are no leakages and injections, _____.

• A) households spend all their income on consumption
• B) government policies play a vital role in determining the level of economic activity of a
• C) the foreign trade sector is of prime importance
• D) households undertake both consumption and investment activities

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Definitions:

Variable Cost

A cost that changes in proportion to the level of output or activity in a business.

Special Discounted Price

A reduced price offered on goods or services, usually as part of a promotional deal or to certain groups of customers.

Idle Capacity

The portion of a company’s resources or assets that are not being used to their full potential, often leading to inefficiencies.

Minimum Acceptable Price

The lowest price at which a seller agrees to sell a product or service, ensuring that the sale still generates a profit or covers costs.