In the Circular Flow Model, Who Is a Seller in the Factor

question 3

Multiple Choice

In the circular flow model, who is a seller in the factor markets and a buyer in the product markets?

• A) Businesses.
• B) Transnational corporations.
• C) Foreign producers who export final goods and services into the U.S.
• D) Households.

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Definitions:

Annual Production Rate

The total quantity of goods that a facility produces over the course of a year.

Intrinsic Value

The actual, fundamental value of an asset, determined through financial analysis without reference to its market value.

Put

It refers to an options contract giving the holder the right but not the obligation to sell a specified amount of an underlying security at a predetermined price within a specified time frame.

Underlying Asset

The financial asset that determines the value of a derivative instrument or structured product.