The Circular Flow Diagram Shows That

question 166

Multiple Choice

The circular flow diagram shows that

• A) the flow of payments to the factors used to produce goods and services exceeds the flow of payments for final goods and services.
• B) goods and factor markets are independent.
• C) the total amount of income generated by the economy equals the total purchases of final goods and services.
• D) consumption expenditure equals saving.

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Definitions:

Economic Events

Transactions or occurrences that affect the financial position of a company, requiring recording in the financial statements.

Internal User

Refers to individuals within an organization who use financial information to make decisions, including managers and employees.

Accounting Information

Financial data and reports derived from accounting practices, used by stakeholders to make informed decisions regarding a company or entity.

Financial Reporting

The method of generating reports that reveal a company's financial condition to its management, investors, and governmental bodies.