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What do we learn from the circular flow diagram? + An Expanded Circular-Flow Diagram Government purchases of goods and services Government borrowing Government Consumer spending Taxes Government transfers Private savings Households Wages, profit, interest, rent Factor Markets Financial Markets Markets for goods and services GDP Firms Wages, profit interest, rent Borrowing and stock issues by firms Foreign borrowing and sales of stock Foreign lending and purchases of Exports Rest of the world Imports stock In the event of a recession, the key is to increase spending in the economy, most likely by the government Business cycles and unemployment are driven by regulations, weather events, and high taxes that reduce The supply of goods and services in the economy depends on the flow of money between households an Imports from foreigners reduce the flow of money within the economy, leading to recessions In the long run, money and inflation have no impact on the real economy

What do we learn from the circular flow diagram? + An Expanded Circular-Flow Diagram Government purchases of goods and services Government borrowing Government Consumer spending Taxes Government transfers Private savings Households Wages, profit, interest, rent Factor Markets Financial Markets Markets for goods and services GDP Firms Wages, profit interest, rent Borrowing and stock issues by firms Foreign borrowing and sales of stock Foreign lending and purchases of Exports Rest of the world Imports stock In the event of a recession, the key is to increase spending in the economy, most likely by the government Business cycles and unemployment are driven by regulations, weather events, and high taxes that reduce The supply of goods and services in the economy depends on the flow of money between households an Imports from foreigners reduce the flow of money within the economy, leading to recessions In the long run, money and inflation have no impact on the real economy

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Savings,investment And The Financial System
Section: Chapter Questions
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What do we learn from the circular flow diagram? + An Expanded Circular-Flow Diagram Government purchases of goods and services Government borrowing Government Consumer spending Taxes Government transfers Private savings Households Wages, profit, interest, rent Factor Markets Financial Markets Markets for goods and services GDP Firms Wages, profit interest, rent Borrowing and stock issues by firms Foreign borrowing and sales of stock Foreign lending and purchases of Exports Rest of the world Imports stock In the event of a recession, the key is to increase spending in the economy, most likely by the government Business cycles and unemployment are driven by regulations, weather events, and high taxes that reduce The supply of goods and services in the economy depends on the flow of money between households an Imports from foreigners reduce the flow of money within the economy, leading to recessions In the long run, money and inflation have no impact on the real economy
Transcribed Image Text:What do we learn from the circular flow diagram? + An Expanded Circular-Flow Diagram Government purchases of goods and services Government borrowing Government Consumer spending Taxes Government transfers Private savings Households Wages, profit, interest, rent Factor Markets Financial Markets Markets for goods and services GDP Firms Wages, profit interest, rent Borrowing and stock issues by firms Foreign borrowing and sales of stock Foreign lending and purchases of Exports Rest of the world Imports stock In the event of a recession, the key is to increase spending in the economy, most likely by the government Business cycles and unemployment are driven by regulations, weather events, and high taxes that reduce The supply of goods and services in the economy depends on the flow of money between households an Imports from foreigners reduce the flow of money within the economy, leading to recessions In the long run, money and inflation have no impact on the real economy
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