The complete circular flow model shows that

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The complete circular flow model shows that government uses the tax revenue from households and businesses to supply public services. This is one of the key components of the model, along with the flow of goods and services between businesses and consumers, and the flow of factors of production between households and businesses. Net exports (exports minus imports) can be either positive or negative, and are not always equal to zero. Business firms are not the revenue source for consumers, but rather the opposite - consumers are the revenue source for businesses. Factors of production, such as labor and capital, are demanded by both businesses and government, not just the government. The goods and services produced by business firms are sold through product markets, not resource markets.

The Complete Circular Flow Model Shows That