Author Question: In the circular flow model, profits are considered to be A) a cost of doing business. B) equal ... (Read 35 times)

gonzo233 · **on:** Jun 30, 2018

In the circular flow model, profits are considered to be

A) a cost of doing business.
B) equal to zero, or else the circular flow would be out of balance.
C) a subtraction from the Gross Domestic Product (GDP).
D) a form of interest payment.

Question 2

In the simple circular flow model

A) businesses buy labor services from households, but supply other factors of production themselves.
B) households spend their entire income on consumer products.
C) profits are a type of income that is not received by households.
D) households spend the income they receive from labor services but save the income they receive from selling the other factors of production.