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AP® Macroeconomics

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Moderate

Circular Flow: Government Involvement

APMACR-IRBEFZ

Which of these statements accurately characterizes the role of the government in the circular flow model?

A

The government buys factors of production from households and lends money to the financial sector.

B

The government purchases imports from foreign countries and makes transfer payments to households.

C

The government collects taxes from households and firms and makes transfer payments to households.

D

The government collects taxes from firms and lends money to the financial sector.

E

The government buys factors of production from households and buys imports from foreign countries.