In the circular flow diagram, firms' payments ________ the government.
A) only flow into
B) flow into and out of
C) only flow out of
D) do not affect

Question

Quizplus · Accepted Answer

Firms make payments to the government in the form of taxes and fees, but also receive payments from the government in the form of subsidies, contracts, and other programs. Therefore, payments flow into and out of the government sector in the circular flow diagram.

In the Circular Flow Diagram, Firms' Payments ________ the Government