The Circular Flow Model Represents the Establishment of Market Value

question 14

Multiple Choice

The circular flow model represents the establishment of market value for:

• A)goods and services.
• B)wages and salaries.
• C)profits and rents.
• D)all of these.

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Definitions:

Government Expenditures

Spending by the government sector on goods and services, including infrastructure, public services, and transfer payments.

Net Taxes

The difference between the taxes paid to the government and the transfers or subsidies received from it.

Government Purchases

Government purchases involve the spending by government entities on goods and services, including investments in public infrastructure, which can influence economic activity.

Transfer Payments

Payments made by the government to individuals or entities without any service or goods being received in return, such as social security benefits.