Question

Ironhorse Tools has used $700,000 from its total annual earnings of $1,650,000 to invest in upgrading its manufacturing facilities. Its accounts receivable from customers is estimated to be $130,000 and accounts payable $75,000. In monetary terms, what would Ironhorse's resource flows be?

Answer 1

$700,000

Step-by-step explanation:

In economics, resource flows refers to how different resources flow through an economy, e.g. retail businesses receive money from households (customers), but it also pays wages to households (employees) and purchase more goods in order to resell them.

In this case, the company received money from its customers, but it invested $700,000 in upgrading its facilities. This means that it paid another business $700,000 in exchange for new machinery.