The following shows the circular-flow diagram for the closed economy of Wenatche

Question

The following shows the circular-flow diagram for the closed economy of Wenatchee Government purchases of goods and services Government borrowing Government Taxes Government transfers Consumer spending Private savings Households Wages, profit, interest, rent Markets for goods and services Factor markets Financial markets Total spending on goods and services Wages, profit, interest, rent Borrowing and stock issues by firms Firms Investment spending Govemment purchases of goods and services Govemment borrowing Transfers Wages, profit, interest, rent Private savings $500 $200 $100 $2900 $600 Given the information in the table above, solve for the value of consumer speding. Enter the number of dollars and no dollar sign eg. one thousand dollars-1000). Consumer spending

Explanation / Answer

Private saving= simply wage, profit, interest and rent minus private saving=2900-600=2300

Note wages, profits, interest and rent is income of consumers And income minus saving=consumption according to economic theory

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