This image illustrates the circular flow of income and expenditure within an economy, highlighting the interactions between different sectors.1. **Government**: - Government purchases of goods and services amount to $100. - Taxes collected from households total $100.2. **Households**: - Consumer spending is $650. - Households receive wages, profits, interest, and rent from factor markets, totaling $750.3. **Factor Markets**: - Factor markets supply firms with required inputs at a cost of $750, represented as wages, profits, interest, and rent.4. **Firms**: - Firms use inputs from factor markets to produce goods and services and generate a Gross Domestic Product (GDP). - They supply wages, profits, interest, and rent to the factor markets amounting to $750.5. **Markets for Goods and Services**: - This market handles the exchange of goods and services utilizing consumer spending ($650), government purchases ($100), and exports ($20). 6. **Rest of the World**: - Exports to other countries total $20, while imports from the rest of the world also total $20, indicating a balance in trade.The various arrows indicate the flow of money between these entities, demonstrating the interconnectedness of economic activity and the flow of income throughout the system. 1. At right is a simplified circular-flow diagram for the economy of Micronia. (Note that there is no investment in Micronia.)a. What is the value of GDP in Micronia?b. What is the value of net exports?c. What is the value of disposable income?

We are going to find the disposable income, Gross domestic product to answer this question.

Answered: YAt right is a simplified circular-flow…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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YAt right is a simplified circular-flow diagram for the economy of Micronia. (Note that there is no investment in Micronia.) a. What is the value of GDP in Micronia? b. What is the value of net exports? c. What is the value of disposable inçome?