The Circular Flow Diagram Shows That

question 170

Multiple Choice

The circular flow diagram shows that

• A)the value of total income is equal to the total value of expenditures on final goods and services.
• B)firms pay households wages, and households receive transfer payments from firms.
• C)household spend all their income on goods and services.
• D)GDP will be less than the total value of expenditures on final goods and services in the economy.

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Definitions:

Actual Production

Refers to the quantity of goods that have been produced within a given time frame, as opposed to planned or theoretical production levels.

Direct Labour Variance

The difference between the actual direct labor costs incurred and the standard costs for the actual production achieved.

Direct Labour Standards

Benchmarks for the amount of labor time that is expected to be necessary to produce a unit of product or to complete a process.

Total Cost

The complete cost of production, including both fixed and variable costs.