The Circular Flow Diagram Shows That

question 256

Multiple Choice

The circular flow diagram shows that

• A)the value of total income is equal to the total value of expenditures on final goods and services.
• B)firms pay households wages,and households receive transfer payments from firms.
• C)households spend all their income on goods and services.
• D)GDP will be less than the total value of expenditures on final goods and services in the economy.

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Definitions:

Exchange Rate

The price at which one currency can be exchanged for another currency in the foreign exchange market.

Functional Currency

Functional currency is the currency of the primary economic environment in which an entity operates, and in which its financial statements are prepared.

Functional Currency

The main currency used by a business or unit in its day-to-day operations.