Government Circular Flow Diagram
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Government Circular Flow Diagram

RESOURCEMARKETBUSINESSESPRODUCTMARKETHOUSEHOLDSGOVERNMENTGoods &servicesRevenueGoods &servicesLand, labor, capital,entrepreneurialabilitymoney incomeRESOURCESCOSTSEXPENDITURESGOODS & SERVICESNET TAXESResourcesGoods & servicesNet taxesEXPENDITURESGoods & services
publish time: 2021-06-29

The actual economic scenario involves the government and the government present at the circular flow chart center. The flow of capital and labor supply from the household gets circulated to the businesses that provide various services and goods to the households. The service price goes back to households in the form of rents, wages, and more. The government is present in the middle who gets the taxes from both households and businesses, keeping this basic structure intact.