In the Circular Flow Diagram, the Counterclockwise Direction Shows the Flow

question 283

Multiple Choice

In the circular flow diagram, the counterclockwise direction shows the flow of _____, where households supply _____ and businesses supply _____.

• A) money; purchases of goods and services; income to households
• B) money; labor; goods and services
• C) goods and services; labor; goods and services
• D) goods and services; purchases of goods and services; income to households

---

Definitions:

Operating Activities

Business activities related directly to the production, sale, and delivery of a company's products or services, often reflected in its cash flow.

Fixed Asset

Long-term tangible assets held for business use and not expected to be converted to cash in the coming fiscal year, such as buildings, machinery, and equipment.

Direct Method

An approach to preparing the cash flow statement that lists actual cash inflows and outflows from operating activities.

Operating Activities

The day-to-day actions and transactions that relate to the primary operations of a business, such as sales and purchasing.