The Circular Flow Diagram Shows That

question 166

Multiple Choice

The circular flow diagram shows that

• A) the flow of payments to the factors used to produce goods and services exceeds the flow of payments for final goods and services.
• B) goods and factor markets are independent.
• C) the total amount of income generated by the economy equals the total purchases of final goods and services.
• D) consumption expenditure equals saving.

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Definitions:

Required Rate of Return

The required rate of return is the minimum return an investor expects to receive on an investment, considering its risk level.

Dividend Increase

An action by a company to increase the amount of dividends distributed to its shareholders.

Market Rate of Return

The average rate of return that investors expect to earn in the market on an investment, reflecting the risk and liquidity of the asset.

Annual Dividend

The total payment received from a stock or other investment security over the span of a year, often distributed quarterly by the issuing company.