Governments in the Circular Flow Figure 2.5 adds governments to the circular flow model. As you study
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Governments in the Circular Flow Figure 2.5 adds governments to the circular flow model. As you study this figure, first notice that the outer circle is the same as in Figure 2.4 .
In addition to these flows, governments buy goods and services from firms. The red arrows that run from governments through the goods markets to firms show this expenditure.
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