In the Circular Flow Diagram, the Different Payments Made by Firms

question 16

Multiple Choice

In the circular flow diagram, the different payments made by firms to households include

• A) wages and profits.
• B) interest and taxes.
• C) transfer payments and dividends.
• D) taxes and transfer payments.

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Definitions:

Fixed Amount

A specific, unchanging quantity or sum, often used in financial contexts to denote a constant payment or investment.

Accounting Profits

The profit or loss recorded on a company's financial statements, calculated as revenues minus expenses and taxes.

Economic Profits

The difference between total revenue and total costs, considering both explicit and implicit costs.

Salary Offer

The amount of pay or compensation that an employer is willing to give an employee for their work.