Question

A circular flow model is shown. Box A connects savings and investments. Box B connects taxation and government spending. Box C connects imports and exports. Letter D is to the left of savings, taxation , and imports. Letter E is to the right of investments, government spending, and exports.
Use the drop-down menus to answer the questions.
In this circular flow mode, what does the letter A present?

What does the letter B represent?

What does the letter C represent?

What does the letter D represent?

Answer 1

A — Financial market (financial sector/banks)

B — Government (public sector)

C — Foreign sector / Rest of the world (imports & exports)

D — Households (consumers)