An Example of a Money Flow in the Circular Flow

question 126

Multiple Choice

An example of a money flow in the circular flow diagram is

• A) a student's payment of tuition to her university.
• B) the government's operation of the court system.
• C) the government's financing of the national debt.
• D) a firm's production of goods to sell to a foreign country.
• E) a farmer's use of land to grow wheat.

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Definitions:

Direct Labor Costs

Costs associated with employees who are directly involved in the production of goods or services.

Manufacturing Overhead

All indirect costs associated with manufacturing beyond direct materials and direct labor, such as utilities, depreciation, and maintenance of equipment.

Raw Materials

Basic materials used in the production process to manufacture finished goods.

Raw Materials Inventory

The total cost of all the materials that are held by a company and that will be used in production.