In the Circular Flow Model, Who Is a Seller in the Factor

question 3

Multiple Choice

In the circular flow model, who is a seller in the factor markets and a buyer in the product markets?

• A) Businesses.
• B) Transnational corporations.
• C) Foreign producers who export final goods and services into the U.S.
• D) Households.

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Definitions:

Total Liabilities

The sum of all financial obligations a company owes to external parties, including loans, accounts payable, and mortgages.

Closing Process

The closing process in accounting involves summarizing all revenues and expenses for the period and transferring the balances to the owner's equity account to prepare for the next accounting period.

Temporary Accounts

These are accounts that are closed at the end of each accounting period, including revenues, expenses, dividends, and income summary accounts, to prepare the company for a new accounting period.

Retained Earnings

The portion of net income not distributed as dividends but retained by the company to reinvest in its business or to pay debt.