A circular flow diagram that includes the government and the foreign sector shows that the role of the Canadian government is
A) only to provide services to households and firms.
B) only to collect net taxes from households and firms.
C) only to purchase goods and services.
D) both to provide services and to collect net taxes from households and firms.
E) to provide services to,and collect net taxes from,households and firms,and to purchase goods and services.

Question

Quizplus · Accepted Answer

A circular flow diagram with the government and foreign sector included shows that the Canadian government provides services to households and firms, collects net taxes from them, and also purchases goods and services. Therefore, the correct choice is E.

A Circular Flow Diagram That Includes the Government and the Foreign