In a Circular-Flow Diagram

question 242

Multiple Choice

In a circular-flow diagram,

• A)taxes flow from households to firms, and transfer payments flow from firms to households.
• B)income payments flow from firms to households, and sales revenue flows from households to firms.
• C)resources flow from firms to households, and goods and services flow from households to firms.
• D)inputs and outputs flow in the same direction as the flow of dollars, from firms to households.

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Definitions:

Amortization

The process of spreading the cost of an intangible asset over its useful life for accounting and tax purposes.

Indefinite Life

An accounting term for assets that are not subject to depreciation due to their perpetual existence or usefulness.

Outstanding Common Stock

Shares that are issued by a company and held by investors, excluding any shares held as treasury stock by the company itself.

Annual Amortization

The systematic reduction of the cost (or other basis) of an intangible asset over a specified time period.