Use the Following to Answer Questions

question 127

Multiple Choice

Use the following to answer questions .
Exhibit: Circular Flow Model
-(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced. The arrow marked "C" represents the flow of:

• A) factors of production.
• B) factor incomes.
• C) personal consumption expenditures.
• D) consumer goods and services.

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Definitions:

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, where the investment is recorded at cost and adjusted for the investor's share of the investee's profit or loss.

Realised Profit

Profit that has been made from completed transactions as opposed to estimated gains based on the current market valuation.

Investment in Associate

Investment in another entity where the investor has significant influence over the investee but does not control or jointly control it, usually represented by ownership of 20% to 50% of the voting stock.

Share Capital

The funds raised by a company through the issuance of shares to investors, representing the equity stake of shareholders.