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Q2: Let's bring governments into the picture. Answer the following questions involving governments located at the center of the circular flow diagram. RESOURCE MARKET Businesses buy (8) K M HOUSEHOLDS BUSINESSES Sell resources GOVERNMENT Buy resources Buy products Sell products (J) INI P O O PRODUCT MARKET Businesses sell louseholds buy (a) Governments buy goods and services (e.g., fire engine trucks) in the product market, rewarding businesses by spending money there. Identify the two segments in the CFD depicting these physical and financial transactions. Answer: Physical Flow: Financial Flow: (b) Governments buy resources (e.g., land) and resource services (e.g., fire fighters) in the resource market, rewarding resource owners by spending money there. Identify the two segments in the CFD depicting these physical and financial transactions. Answer: Physical Flow: , Financial Flow: (c) Governments provide goods and services to households (e.g., fire protection) and collect net taxes (i.e., taxes, net of subsidies to households) from them. Identify the two segments in the CFD depicting these physical and financial transactions. Answer: Physical Flow: Financial Flow: (d) Governments provide goods and services to businesses (e.g., fire protection) and collect net taxes (i.e., taxes, net of subsidies to businesses) from them. Identify the two segments in the CFD depicting these physical and financial transactions. Answer: Physical Flow: Financial Flow