In the Simple Circular-Flow Diagram,who Buys the Factors of Production

question 10

Multiple Choice

In the simple circular-flow diagram,who buys the factors of production?

• A)households only
• B)firms only
• C)both households and firms
• D)neither households nor firms

Understand the role of government intervention in a market economy for public goods, externalities, and economic stability.

Describe the coordinating mechanism of price in a free-market system.

Recognize the significance of markets as institutions for exchange.

Understand the concept of wealth accumulation through saving and inheritance.

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Definitions:

Double Taxation

The imposition of taxes on the same income, asset, or financial transaction at two different levels of government, typically seen with corporate income taxed at both the corporate and shareholder levels.

Dividends Received

Distributions from a corporation to its shareholders, often sourced from the business's income.

Consumption Tax

A tax on the purchase of goods or services, which can be proportional, progressive, or regressive, and is levied on the expenditure on goods and services.

Sales Tax

A government-imposed charge on goods and services purchased, collected at the point of sale.