Question

4. Where do individuals spend the money they earn, and how does this keep the economy going?

Answer 1

Answer:

Individuals spend their money purchasing goods and services from businesses in the product markets. Businesses return this money to the factor markets in the form of wages, salaries, and payments for resources, continuing the circular flow of activity.

Explanation:

Consumer spending makes up more than 70 percent of the economy, and it usually drives growth during economic recoveries.” ... In the business cycle, production and investment lead the economy into and out of a recession; retail demand is the most stable component of economic activity.

Answer 2

Individuals spend the money they earn on products produced by manufacturers. This keeps the economy going by allowing cash to flow through multiple hands during a single day. Because of this there is an inverse affect when people save their money instead of spending it.