In the Circular Flow Model

question 15

Multiple Choice

In the circular flow model,

• A) the government is represented as a separate market.
• B) the government buys goods and services from firms.
• C) goods and services are sold by households and purchased by firms.
• D) factor markets are where goods rather than services are bought and sold.
• E) the government has no direct interaction with either households or firms.

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Definitions:

Fixed Cost

Expenses that do not change in relation to the level of goods or services produced within a certain range of activity.

Static Budget

A static budget is a fixed budget created for a specific level of activity and does not change with the actual level of activity, often used for planning purposes.

Guest-Days

A metric used in the hospitality industry, calculating the total number of guests multiplied by the number of days they stayed.

Total Cost

the aggregate of all costs, both fixed and variable, incurred in producing goods or services.