(Solved): Figure: Expanded Circular-Flow Model Government purchases of goods and services - $200 Government $ ...

Figure: Expanded Circular-Flow Model Government purchases of goods and services - $200 Government $150 - Taxes Households Consumer spending - $700 Gross domestic product Investment spending - $120 Markets for goods and services Government borrowing - $70 Private savings - $170 Wages, profit, interest, rent - $1,000 Government transfers - $20 Wages, profit, interest. rent-$1.000 Factor markets Borrowing and stock issues by firms - $120 Financial markets Firms Exports - $30 Foreign borrowing and sales of stock - $110 Rest of world Imports - $50 Foreign lending and purchases of stock - $130 Reference: Ref 22-2 (Figure: Expanded Circular-Flow Model) How does the government finance all of its spending? investment spending of $120 taxes of $150 plus borrowing of $70 net exports of $80 O foreign borrowing and sales of stock of $110