For the Complete Circular Flow Model to Hold, Net Exports

question 51

True/False

For the complete circular flow model to hold, net exports must always be zero.

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the usage, wear and tear, or obsolescence of the asset.

Effective Tax Rate

The average percentage that companies or individuals pay in taxes on their total income.

Goodwill

An intangible asset representing the excess of purchase price over the fair market value of identifiable assets and liabilities acquired in a business combination.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the proportionate share of profit or loss and dividends received.