Describe the government's flows in the circular flow model of the ...

[HudsonKB16]

Describe the government's flows in the circular flow model of the economy.
 
  What will be an ideal response?

Question 2

The figure above shows a nation's consumption function. The amount of autonomous consumption expenditure is
 
  A) 1 trillion.
  B) more than 3 trillion.
  C) 3 trillion.
  D) 0.
  E) 2 trillion.

[hanadaa]

Answer to Question 1

The government has several flows in the circular flow model. First, the government taxes households and firms. Hence, funds flow from households and firms to the government. Second, the government transfers income back to households, via payments such as social security. In this case, funds flow from the government to households. The government also purchases goods and services from firms in the goods market. In this case, goods and services flow to the government and payments flow to firms.

Answer to Question 2

A

[HudsonKB16]

Thank you

[hanadaa]

No problemo