If Lacy Buys a Smoothie at the Corner Store, Which

question 168

Multiple Choice

If Lacy buys a smoothie at the corner store, which of the following best relates this transaction to the circular flow model?

• A) Goods flow from firms and money flows from households through the product markets.
• B) Resources (land, labor, or capital) flows from households, and money flows from business in the product markets.
• C) Income flows from the factor markets, and goods flow into the factor markets.
• D) Resources flow into households, and back into the goods and services markets.

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Definitions:

Impairment

The reduction in the recoverable value of a fixed asset or goodwill below its book value on the balance sheet, often leading to an expense in the income statement.

Retained Earnings

Accumulated net income that has been retained by a company rather than distributed to its owners as dividends.

Shareholders

Individuals or entities that own shares in a corporation, giving them ownership interest in the company.

Cost Method

An accounting method used to record investments, where the investment is recorded at its acquisition cost without adjusting for changes in market value.