In the Circular-Flow Diagram, the Value of Household Income-The Sum

question 125

Multiple Choice

In the circular-flow diagram, the value of household income-the sum of wages, dividends, interest, rental income, and transfer payments-equals the sum of:

• A)household tax payments.
• B)consumer spending, private saving, and household tax payments.
• C)the money supply.
• D)transfer payments and household tax payments.

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Definitions:

Profitability Index

A calculation used to determine the relative profitability of an investment, based on the present value of future cash flows divided by the initial investment cost.

Internal Rate

Often refers to internal rate of return (IRR), a financial metric used to estimate the profitability of potential investments.

Cash Inflows

The money received by a business from its various sources during a specific period, such as sales revenue, investments, and financing.

Operating Costs

The expenses associated with the day-to-day functioning of a business, including salaries, utilities, and rent.