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What is an example of government activity in the circular flow model? in the circular flow model, government, a, buy goods and services from firms which flow through the goods market, b, receive taxes from households through the factor markets, c, make transfers to households through factor markets, d, buy goods and services from firms which flow directly from firms to households and do not go through the goods markets.
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Here we have the circular flow model.
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We can see here at the top, we've got the factor market.
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Here we have households.
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On the bottom there is product market.
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And over here on the left, we have businesses.
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And we can see that it flows both ways.
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We've got things going this way as well as things going this way...