Explain the roles of taxation and government expenditure in the circular flow of income

1 answer:

6 0

The role of taxation in the circular flow of income, is basically to have a medium of revenue for the government, if the government is able to earn money, they are able to spend it on the economy.
So then the role of Government expenditure is to make sure the money goes back into the economy, if the government were to save the money, the economy will have restriction to grow, if all the money the government creates from tax was put back into the economy by spending in say, Heath, Education, Investment, the economy can grow because then household will spend money from their income to utilise these industries.
Hopefully this helps!

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Please see the Demand and Cost information reproduced in the attached table

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The correct choice is A)

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At this price, MR = MC.

Please see the attached PDF.

Explanation:

The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost:

That is, the point where MR = MC.

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