In the Circular Flow Diagram, Households Get Their Ability to Pay

question 219

Multiple Choice

In the circular flow diagram, households get their ability to pay for their consumption expenditures from the

• A)revenues they receive for their products.
• B)costs they incur for resources.
• C)incomes they earn for their resources.
• D)goods and services they get in the product markets.

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Definitions:

Guarantee

A promise or assurance, typically in writing, that certain conditions will be fulfilled, often related to the quality, durability, or performance of a product.

Capital Lease

A capital lease is a lease agreement where the lessee receives ownership rights over the asset, for accounting purposes, similar to a purchase financed through a loan.

Economic Life

The duration over which an asset is expected to be economically usable, with its cost being justified by its performance.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, reflecting the time value of money.