How does the circular flow model of a mixed economy compare with that of a market economy?

a. Government is added into the circular flow model of a mixed economy.

b. There is no factor market in the circular flow model of a market economy.

c. Government is added into the circular flow model of a market economy.

d. There is no factor market in the circular flow model of a mixed economy.

The correct answer is: A: Government is added into the circular flow model of a mixed economy.

Explanation:

Right into the medium of factor market, the term government has been all involved in terms of buying the labor from the employees. They also buy the capital from the view of establishments of land and domestic. They are governing products and services.

a. Government is added into the circular flow model of a mixed economy.

In the factor market, the government buys labor from employees, capital from domestic establishments and land. In the product market, the government uses goods and services to provide infrastructure, streets, parks, buildings, office supplies etc.

The taxes collected by the government from the households and businesses transfer the money to individuals and businesses.