In a Circular-Flow Diagram,total Income and Total Expenditures in an Economy

question 81

Multiple Choice

In a circular-flow diagram,total income and total expenditures in an economy are:

• A)equal because firms are ultimately owned by households.
• B)equal only if there is no saving.
• C)equal because every transaction has a buyer and a seller.
• D)always equal because some people's income is not for production.

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Definitions:

Liability Account

An accounting record that holds the amounts owed by a company to creditors, suppliers, or lenders.

Terms

Conditions under which a sale is made, including payment timeframe, discounts, and penalties for late payment.

Discount

A reduction from the usual cost of something, or the act of lowering the price of goods, services, or securities.

Day

A 24-hour period from midnight to midnight.