Government and the Economy Flashcards
Does the U.S. government play a role in our economy
yes
what is involved in circular flow?
resources, goods and services flowing freely among households, businesses and markets (money flows in other direction)
where does “Purchases of goods and services” go?
1
where does “taxes” go?
2 & 7
where does “Government purchases” go?
3
where does “demand” go?
4
where does “Incomes” go?
5
where does “Social Transfers” go?
6
where does “wages, dividends, intersect, profits and rent” go?
8
what role does the government play in circular flow?
taxing consumers and businesses to provide public goods and services
what is money?
anything referred to as payment
makes it easier to borrow, save, invest and purchase good and services
what are 3 types of money?
coins
federal reserve notes (surrency of dollar bills)
deposits in bank accounts
what role do banks and credil unions play?
they encourage saving or investing by paying interest
what are public goods and services?
things that are provided to individuals and buissnesses by the government
Ex: highways, national defense, education
how does the government pay for goods and services?
(there are 3)
tax revenue,
borrowed funds,
fees paid
