According to the Circular Flow, the Value of Total Output

question 72

Multiple Choice

According to the circular flow, the value of total output produced and total income

• A) should differ by the value of intermediate goods.
• B) should increase by the unanticipated rate of inflation.
• C) will always be increasing in a capitalist economy.
• D) will be equal.

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Definitions:

After-Tax Net

The remaining income of a business or investment after all taxes have been deducted.

Unlevered Cost

Refers to the cost a company would incur without the benefit or cost of debt financing.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity and preferred equity, which is used to finance its overall operations and growth.

Economic Expansion

A phase of the business cycle where the economy grows and increases in activity, marked by rising GDP, employment, and income.