The figure above shows governments in the circular flow.
-In the figure above,households

Question

Quizplus · Accepted Answer

The arrows indicate that households receive transfers directly from governments, such as social welfare payments or subsidies. They do not buy goods and services from governments in goods markets (B), as this would involve households paying for those goods and services. While households do receive transfers from governments through factor markets (C) in the form of subsidies to businesses or tax breaks for investment, this is not the most direct route for transfers to households. Households do not sell factors of production to governments (D) in this model, as there is no indication of government ownership of factors of production. Finally, while households do pay taxes to governments, this is not through factor markets (E), but rather through either direct tax payments or indirect taxes on goods and services that they purchase.

The Figure Above Shows Governments in the Circular Flow