In the Second Circular-Flow Model of Chapter 2,households Have Two

question 67

Multiple Choice

In the second circular-flow model of Chapter 2,households have two uses for their total income:

• A)consumption and investment.
• B)consumption and saving.
• C)saving and investment.
• D)saving and payment of taxes.
• E)consumption and payment of taxes.

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Definitions:

Direct Labour

The labor costs directly attributable to the production of goods or the provision of services.

Materials Price Variance

The difference between the actual cost of materials and the standard cost, indicating how much was saved or overspent on materials.

Direct Material Used

Direct material used refers to the raw materials that are directly incorporated into a product being manufactured.

Materials Purchased

The total cost of raw materials bought for use in the production process.