Use the Following to Answer Questions

question 3

Multiple Choice

Use the following to answer questions :
Figure: Circular-Flow Model
-(Figure: Circular-Flow Model) Look at the figure Circular-Flow Model. What is GDP in this economy?

• A)$100
• B)$400
• C)$500
• D)$600

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Definitions:

Erosion

The gradual reduction or depletion of an asset's value or the profitability of a business operation, often due to external factors.

Sunk Cost

A past expenditure that has already been incurred and cannot be recovered, which should not affect current or future financial decisions.

Market Value

The current price at which an asset or company can be bought or sold, determined by the supply and demand dynamics in the market.