The Circular Flow Diagram Shows That

question 256

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)households 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:

Borrowing Company

A company that has taken on debt from external sources, whether through loans, bonds, or other credit mechanisms, to finance its operations or expansion.

Financial Statement Forecasts

Projections of future financial performance based on historical data, current trends, and expected outcomes, often used in business planning and analysis.

Comprehensive Financial

Also known as comprehensive income, includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Comprehensive Risk Analysis

An extensive assessment that identifies, evaluates, and measures the potential impact of various risks on an organization's objectives.