The Condition in Circular-Flow Models Whereby Firms Purchase All the Goods

question 16

Multiple Choice

The condition in circular-flow models whereby firms purchase all the goods not purchased by households is that

• A)inventory investment is zero.
• B)saving is zero.
• C)fixed investment is zero.
• D)consumption equals investment.
• E)investment equals saving.

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Definitions:

Process Costing System

An accounting method used to assign costs to units of production in continuous processes, where similar items are produced.

Weighted-Average Method

An inventory costing method that assigns the cost of goods available for sale based on the weighted average cost of those goods during the period.

Processing Department

A processing department is a division within a manufacturing operation where a specific type of process or series of operations is performed on products.

Cost System

A method or process used by a company to capture, measure, and allocate costs to products, services, or other cost objects.