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Exhibit: The Circular Flow for the United States
-(Exhibit: The Circular Flow for the United States) A New York restaurant purchases 1,000 cases of wine from a winery in France. This transaction is recorded as part of:
A) gross private investment and the flow is represented by 2.
B) net exports and the flow is represented by 4.
C) consumption expenditure and the flow is represented by 1.
D) consumption expenditure and the flow is represented by 4.

Question

Use the following to answer questions .
Exhibit: The Circular Flow for the United States 
-(Exhibit: The Circular Flow for the United States) A New York restaurant purchases 1,000 cases of wine from a winery in France. This transaction is recorded as part of:
A) gross private investment and the flow is represented by 2. 
B) net exports and the flow is represented by 4. 
C) consumption expenditure and the flow is represented by 1. 
D) consumption expenditure and the flow is represented by 4.

Quizplus · Accepted Answer

The purchase of 1,000 cases of wine from France is an example of an import, which is recorded as negative value in the net exports (exports - imports) category. This transaction is represented by flow 4 in the circular flow diagram.

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