At right is a simplified circular-flow diagram for the economy of Micronia. ( there is no investment spending and no transfers in Micronia.)

a. What is the value of GDP in Micronia?

b. What is the value of net exports?

c. What is the value of disposable income?

d. Does the total flow of money out of households — the sum of taxes paid and consumer spending — equal the total flow of money into households?

e. How does the government of Micronia finance its purchases of goods and services?

Transcribed Image Text:

Government purchases = $100 Consumer spending = $650 Markets for goods and services Taxes = $100 Income from sales Export spending = $20 Government Import spending = $20 Households Firms Rest of world Wages, profit. interest, rent = $750 Factor markets Wages, profit, interest, rent = $750