The Circular Flow Model Shows the Flow of

question 93

Multiple Choice

The circular flow model shows the flow of

• A) expenditure and income throughout the economy.
• B) only money throughout the economy.
• C) only funds in stock and bond markets.
• D) only tax payments and government expenditures.
• E) goods market and factor markets as they move through the economy.

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Definitions:

Depreciable Equipment

Tangible assets used in business operations whose cost is allocated over its useful life due to wear and tear, obsolescence, or decay.

Operating Assets

Assets that are used in the day-to-day operations of a business, such as machinery, buildings, and equipment.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows, reflecting the time value of money and risk of the investment.

Working Capital

The amount of available capital that a company has to run its day-to-day operations, calculated as current assets minus current liabilities.