In the Simple Circular Flow Model the Money Received by a Car

question 26

Multiple Choice

In the simple circular flow model the money received by a car maker when it sells a car goes to

• A)the workers who helped build the car.
• B)the owners of firms who sold materials to the car maker,and the rest stays with the firm.
• C)only the owners of the car maker.
• D)the owners of all of the resources used to make the car.

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Definitions:

Money Income

Money income includes the total earnings received by an individual or household in the form of wages, salaries, benefits, and returns on investments over a period.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, where individuals substitute away from more expensive goods towards cheaper ones.

Marginal Utility

The added satisfaction or usefulness received from consuming one more unit of a good or service.

Total Utility

The total satisfaction received from consuming a certain amount or combination of goods and services.