In the Circular Flow Diagram, Households' Payments ________ the Government

question 1

Multiple Choice

In the circular flow diagram, households' payments ________ the government.

• A) only flow into
• B) flow into and out of
• C) only flow out of
• D) do not affect

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Definitions:

Direct Method

A method of computing the net cash provided by operating activities in which the income statement is reconstructed on a cash basis from top to bottom.

Indirect Method

A reporting approach used in cash flow statements where net income is adjusted for non-cash transactions and changes in working capital to arrive at cash flow from operating activities.

Financing Activities

Transactions related to raising capital and repaying investors, affecting the company's equity and long-term debt.

Free Cash Flow

The amount of cash generated by a business after accounting for capital expenditures, essential for maintaining or expanding assets.