In the Circular Flow Model

question 1

Multiple Choice

In the circular flow model,

• A)the flow of expenditures measures the dollar value on purchases of resources in the product market
• B)the flow of expenditures measures the dollar value of purchases of both goods and services
• C)the flow of income to the owners of labor only
• D)the flow of expenditures as they move through the loanable funds market
• E)the flow of funds from the product to the resource market

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Definitions:

Price

The amount of money required to purchase a good or service, often determined by factors like demand, supply, and market competition.

Utility Function

A representation or model used in economics to quantify the satisfaction or happiness a consumer derives from consuming goods and services.

Income

Payment obtained, regularly, for services rendered or from capital investments.

Preferences

In economics, refers to the subjective tastes and desires of consumers that influence their choices and demands.