The Simple Circular Flow of Income Shows That the Total

question 221

Multiple Choice

The simple circular flow of income shows that the total income in an economy equals

• A) total profits earned by firms.
• B) all taxes paid by households.
• C) the total amount of money supplied by the government.
• D) total expenditures.

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Definitions:

Adequate Records

Comprehensive and accurate documentation of financial transactions necessary for accounting and tax compliance.

Payee

In a monetary transaction, the recipient of the payment.

Maker

In a financial context, the maker is the party that creates or issues a financial instrument, such as a check or promissory note.

Cashier

An employee who handles customer transactions and the management of money in a retail environment, often responsible for processing cash, credit, and other forms of payment.