Exhibit 1.1 -Refer to the Circular-Flow Model in Exhibit 1.1. If a Exhibit

question 46

Multiple Choice

Exhibit 1.1

-Refer to the circular-flow model in Exhibit 1.1. If A represents product markets, and D represents firms, then the flow from A to D is:

• A) revenue.
• B) expenditures.
• C) labor, capital, and natural resources.
• D) goods and services.
• E) wages, interest, rent, and profit.

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Definitions:

Operating Expenses

The costs of running your business, including your rent, utilities, administration, marketing/advertising, employee salaries, and so on.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including materials and labor.

Short-Term Portion of Long-Term Debt

The part of a company's long-term debt that is due to be paid within the following twelve months.

5-Year Bank Loan

A financial agreement where a bank lends money to a borrower, to be repaid with interest over a period of five years.