The Circular Flow Shows That

question 2

Multiple Choice

The circular flow shows that

• A) aggregate production equals aggregate expenditure.
• B) aggregate expenditure is less than aggregate income.
• C) GDP equals aggregate income.
• D) Both answers A and C are correct.

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Definitions:

Credit-Granting Policies

Credit-granting policies are the guidelines a business follows in determining who qualifies for credit, how much credit is offered, and under what terms.

Return On Equity Ratio

A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.

Management Effectiveness

The degree to which managerial actions achieve the desired outcomes and objectives through efficient resource use.

Sole Proprietorships

A type of enterprise that is owned and operated by a single individual, with no legal distinction between the owner and the business.