Question: Use the circular flow diagram to show how each of the following government actions simultaneously affects the allocation of resources and the distribution of income:

Use the circular flow diagram to show how each of the following government actions simultaneously affects the allocation of resources and the of income:
a. The construction of a new high school.
b. A 2-percentage-point reduction of the corporate income tax.
c. An expansion of preschool programs for disadvantaged children.
d. The levying of an excise tax on polluters.

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a In building the school the effect would be an increase in government expenditures to the product market 5 and an increase in business revenues 3 The owners of the resources used to building the scho... View full answer

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