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Let’s put dollar amounts on the flows in the circular flow diagram of Figure 2.2.
a. Suppose that businesses buy a total of $100 billion of the four resources (labor, land, capital, and entrepreneurial ability) from households. If households receive $60 billion in wages, $10 billion in rent, and $20 billion in interest, how much are households paid for providing entrepreneurial ability?
b. If households spend $55 billion on goods and $45 billion on services, how much in revenues do businesses receive in the product market?
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