Homework Help is Here – Start Your Trial Now!
Business
Economics
5. For example, a firm will pay to a household for the service of their labor, th then become household 6. Households have three primary expenditures with their income and taxes. 7. Firms have three primary expenditures with their revenues(and other resource costs) into capital, and taxes. 8. Themarket is an intermediary between households that save and firms that borrow to invest. 9. This market is sometimes called the funds market. 10. is deferred consumption.

5. For example, a firm will pay to a household for the service of their labor, th then become household 6. Households have three primary expenditures with their income and taxes. 7. Firms have three primary expenditures with their revenues(and other resource costs) into capital, and taxes. 8. Themarket is an intermediary between households that save and firms that borrow to invest. 9. This market is sometimes called the funds market. 10. is deferred consumption.

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter2: Thinking Like An Economist
Section: Chapter Questions
Problem 1PA
See similar textbooks
icon
Related questions
Question
I need help on questions 5-10 please
**Circular Flow Model Explanation** 1. The Circular Flow Model is a tool that allows us to see all the parts of an economy and their interactions together in one diagram. 2. The goods and services market is an intermediary between firms, who buy outputs, and households that supply them. 3. Household expenditure includes purchases on goods and services. 4. Markets in which firms obtain labor services, capital, and natural inputs from households are resource markets. 5. For example, a firm will pay wages to a household for the service of their labor, which then becomes household income. 6. Households have three primary expenditures with their income: consumption, savings, and taxes. 7. Firms have three primary expenditures with their revenues into capital, wages (and other resource costs), and taxes. 8. The financial market is an intermediary between households that save and firms that borrow to invest. 9. This market is sometimes called the financial funds market. 10. Saving is deferred consumption. 11. Households save today to consume in the future. 12. Investments are the addition to capital. 13. Since capital is a resource, firms make investments in this model. 14. Fiscal policy is how the government manages expenditures and tax revenues. 15. Taxes shift funds from the private sector to the public sector. 16. The government makes purchases in the goods market with some of the revenues. 17. If the government's expenditures exceed their revenues, they borrow from financial markets.
Transcribed Image Text:**Circular Flow Model Explanation** 1. The Circular Flow Model is a tool that allows us to see all the parts of an economy and their interactions together in one diagram. 2. The goods and services market is an intermediary between firms, who buy outputs, and households that supply them. 3. Household expenditure includes purchases on goods and services. 4. Markets in which firms obtain labor services, capital, and natural inputs from households are resource markets. 5. For example, a firm will pay wages to a household for the service of their labor, which then becomes household income. 6. Households have three primary expenditures with their income: consumption, savings, and taxes. 7. Firms have three primary expenditures with their revenues into capital, wages (and other resource costs), and taxes. 8. The financial market is an intermediary between households that save and firms that borrow to invest. 9. This market is sometimes called the financial funds market. 10. Saving is deferred consumption. 11. Households save today to consume in the future. 12. Investments are the addition to capital. 13. Since capital is a resource, firms make investments in this model. 14. Fiscal policy is how the government manages expenditures and tax revenues. 15. Taxes shift funds from the private sector to the public sector. 16. The government makes purchases in the goods market with some of the revenues. 17. If the government's expenditures exceed their revenues, they borrow from financial markets.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 6 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Government Policy
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Brief Principles of Macroeconomics (MindTap Cours…
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS