Use the following to answer questions:
-(Figure 7-2: Expanded Circular-Flow Model) Use Figure 7-2: Expanded Circular-Flow Model. How does the government finance its spending?
A) taxes of $150 plus borrowing of $70
B) foreign borrowing and sales of stock of $110
C) investment spending of $120
D) net exports of $80

Question

Use the following to answer questions: 
-(Figure 7-2: Expanded Circular-Flow Model) Use Figure 7-2: Expanded Circular-Flow Model. How does the government finance its spending?
A) taxes of $150 plus borrowing of $70 
B) foreign borrowing and sales of stock of $110 
C) investment spending of $120 
D) net exports of $80

Quizplus · Accepted Answer

According to the figure, the government finances its spending through taxes of $150 and borrowing of $70, indicated by the arrows pointing towards the government sector labeled "Taxes" and "Borrowing." Therefore, the correct choice is A. The other choices are not supported by the information given in the figure.

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