Incorporating Government into the Circular Flow Model
The circular flow model, a tool for visualizing economic interactions, can be expanded beyond its basic two-sector version (households and firms) to include the government. This expanded framework illustrates the production and consumption of public services, such as primary education, which flow from the government to households. A key feature of this interaction is that households typically consume these services without making a direct payment at the point of consumption.
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Ch.3 Aggregate demand and the multiplier model - The Economy 2.0 Macroeconomics @ CORE Econ
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Incorporating Government into the Circular Flow Model
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