Because Every Transaction Has a Buyer and a Seller

question 207

Multiple Choice

Because every transaction has a buyer and a seller,

• A)GDP is more closely associated with a nation's income than it is with a nation's expenditure.
• B)every transaction contributes equally to an economy's income and to its expenditure.
• C)the number of firms must be equal to the number of households in a simple circular-flow diagram.
• D)firms' profits are necessarily zero in a simple circular-flow diagram.

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Definitions:

Noncurrent Monetary Liabilities

Long-term financial obligations that are not due within the next 12 months, such as bonds payable or long-term loans.

Present Value

The current value of future money or cash flows, determined by applying a specific rate of return.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

Stated Rate

The interest rate expressed in the terms of a loan or bond agreement, not necessarily reflecting the effective interest rate after considering fees or compounding.