If We Compare the Four Sources of Spending in the Economy

question 288

Multiple Choice

If we compare the four sources of spending in the economy we see that

• A) household consumption is the smallest.
• B) government expenditure is the largest.
• C) business investment is the largest.
• D) household consumption is the largest.

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Definitions:

Long-Term Assets

Assets that are expected to provide economic benefits to a firm for more than one fiscal year, such as land, buildings, and machinery.

Current Liabilities

A firm’s financial obligations to short-term creditors, which must be repaid within one year.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, including issuing debt, securing loans, or selling company shares.