Answer to Question #151567 in Macroeconomics for Nitin

Question

Present the circular flow explication to the linkage among among household ,firm and government?

Answer 1

In circular flow of income, household supply firm with needed factors of production. Firm convert resources provided by household into goods and services, in turn, household purchase goods and services from the firm. Government levy taxes on household and firm in order to provide certain benefits. Income government receives flows to firm and household in form of subsidies, transfers and purchase of goods and services.