The Figure Given Below Represents the Circular Flow of Income

question 67

Multiple Choice

The figure given below represents the circular flow of income between households, firms, financial intermediaries, and foreign countries. Figure 4.2 Refer to Figure 4.2.Suppose households reduce saving to $7, 000.Everything else held constant, consumption spending must now be:

• A)$18, 000.
• B)$22, 500.
• C)$28, 000.
• D)$32, 000.
• E)$38, 000.

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Definitions:

Corporate Opportunity

A legal doctrine that prohibits directors, officers, and controlling shareholders of a corporation from taking a business opportunity for themselves that rightfully belongs to the corporation.

Canada Business Corporations Act

A Canadian federal statute that governs the incorporation, governance, and dissolution of companies in Canada.

Derivative Action

An action taken by a shareholder in a corporation's name to enforce the corporation's rights when the corporation fails to do so itself.

Directors' Duty

The responsibility of the board of directors to act in the best interests of the company, including duties of care, loyalty, and obedience to the law.