The Circular Flow of Income Involves the Idea That

question 334

Multiple Choice

The circular flow of income involves the idea that

• A) in every economic exchange one party takes advantage of the other party.
• B) the seller of a good receives less than the buyer spends.
• C) the seller of a good receives more than the buyer spends.
• D) the seller of a good receives exactly the same amount as the buyer spends.

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Definitions:

Yield-To-Maturity

The total return anticipated on a bond if the bond is held until its maturity date, considering all interest payments and the principal repayment.

Zero-Coupon Bond

A debt security that doesn't pay periodic interest but is issued at a substantial discount to its face value, maturing at that face value.

Face Value

The nominal or dollar value printed on a bond, stock, or other financial instrument, representing the value at issuance and the value to be repaid at maturity.

Zero-Coupon Bond

A financial security that does not pay periodic interest but is sold at a discount from its face value, and the investor receives the face value at maturity.