Which of the following statements is correct about the role that is played by the government in the circular flow diagram?

Question

Quizplus · Accepted Answer

In the circular flow diagram, the government interacts with both households and firms. It collects taxes from both, provides public goods and services, and makes transfer payments. The government can also be a consumer of factors of production (like labor) and thus makes factor payments (such as wages to public employees).

Which of the Following Statements Is Correct About the Role