In the Circular Flow Model

question 15

Multiple Choice

In the circular flow model,

• A) the government is represented as a separate market.
• B) the government buys goods and services from firms.
• C) goods and services are sold by households and purchased by firms.
• D) factor markets are where goods rather than services are bought and sold.
• E) the government has no direct interaction with either households or firms.

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Definitions:

Depletion Charge

A depletion charge is an accounting technique used to allocate the cost of extracting natural resources from the Earth over the period those resources are consumed.

Depreciation Expense

The distribution of a physical asset's cost across its lifespan, mirroring its depreciation over time.

Journal Entries

Records of financial transactions in an accounting system, indicating the accounts and amounts affected.

Salvage Value

The estimated residual value of an asset at the end of its useful life, reflecting what a company expects to recover once the asset is no longer useful.