d. Does the total flow of money out of households- the sum of taxes paid, consumer spending, and private savings-equal the total flow of money into households? e. How does the government finance its spending?
d. Does the total flow of money out of households- the sum of taxes paid, consumer spending, and private savings-equal the total flow of money into households? e. How does the government finance its spending?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:d. Does the total flow of
money out of households-
the sum of taxes paid,
consumer spending, and
private savings-equal the
total flow of money into
households?
e. How does the government
finance its spending?

Transcribed Image Text:Government purchases of
goods and services $150
Government borrowing $60
Government
Taxes = $100
Government transfers = $10
%3D
Private savings = $200
%3D
Consumer
Wages, profit,
interest,
rent = $800
Households
spending = $510
Markets for goods
and services
Factor
Financial
markets
markets
Gross
Wages, profit,
interest,
rent = $800
domestic
Borrowing and
stock issues by
firms = $110
product
%3D
%3D
Firms
Investment
spending = $110
%3D
Foreign borrowing
and sales of stock = $130
Exports = $50
%3D
Rest of world
Foreign lending and
purchases of stock = $100
Imports = $20
%3D
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