The Figure Above Shows Governments in the Circular Flow

question 56

Multiple Choice

The figure above shows governments in the circular flow.
-In the figure above,households

• A) receive transfers directly from governments.
• B) buy goods and services from governments in goods markets.
• C) receive transfers from governments through factor markets.
• D) sell factors of production to governments.
• E) pay taxes to governments through factor markets.

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Definitions:

Privatization

Transfer or sale of ownership of a certain property or industry by a government to the private (non-government) sector

Government Intervention

The involvement of government in the market with the aim of influencing economic outcomes, such as through regulations, subsidies, or taxes.

Global Pricing

The strategy of setting prices for products or services on a worldwide scale, considering factors like costs, market conditions, and competition.

Intervention Effects

The impact of external actions, often by governments or institutions, intended to alter an outcome or correct a market failure.