The Following Question Are Based on the Following Circular Flow

question 36

Multiple Choice

The following question are based on the following circular flow diagram:

-In the model of the circular flow

• A) the dollar flows on the left side represent expenditures for final goods and services.
• B) the dollar flows on the right side represent incomes being paid by businesses to consumers.
• C) resources flow to businesses on the left side, and final goods and services flow to households on the right side.
• D) households are buyers of factors of production on the left side and sellers of goods and services on the right side.
• E) the dollar value on the left side is unrelated to the dollar value on the right side.

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Definitions:

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made periodically, usually at the end of a financial reporting period, as opposed to continuously.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material, labor, and overhead expenses.

Beginning Inventory

The worth of merchandise on hand ready to be sold at the beginning of a financial period.

Merchandise Purchases

Transactions involving the buying of goods for resale purposes, typically in a retail or wholesale setting, which will either be sold as is or used in the production process.