A Simple Circular Flow Diagram Shows That the Factors of Production

question 55

Multiple Choice

A simple circular flow diagram shows that the factors of production are

• A) owned by the government.
• B) purchased by households.
• C) purchased by businesses.
• D) traded in the market for goods and services.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed by the government on income, consumption, or other economic activities.

Income Mobility

Refers to the ability of an individual or family to move up or down the economic ladder within a society over time.

Income Ladder

A conceptual representation of the distribution of income levels among different groups within a population, often visualized as rungs on a ladder.

Relative Income

The comparison of an individual's or household's income to the larger society, which can influence spending, saving, and lifestyle choices.