The government is part of the circular flow of goods and services. One of its roles is to collect taxes from business firms. In what way can the government balance the economy? *
A. stop collecting taxes
B. give transfer payment
C. provide another market
D. give subsidy to business firms
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Governments levy taxes on households and businesses in order to provide certain benefits to everyone. In the circular flow model, injections into the economy include investment, government purchases, and exports while leakages include savings, taxes, and imports.
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