In the Circular Flow Model, the Demand Arrow Represents

question 83

Multiple Choice

In the circular flow model, the demand arrow represents:

• A) the flow of investment expenditures from households to firms.
• B) the flow of consumption expenditures from households to firms.
• C) the flow of consumption expenditures from firms to households.
• D) the flow of investment expenditures from businesses to firms.

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Definitions:

Net Present Value

A financial metric that calculates the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Present Value

The contemporary valuation of foreseeable future earnings or sequences of cash payments, taking into account a specified interest rate.

Net Present Value Method

A method of evaluating the profitability of an investment by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Rate Of Return

A financial ratio used to calculate the gain or loss of an investment over a specified period, expressed as a percentage of the investment's initial cost.