Explain how governments spend tax money back to households and firms

The government uses the tax collected from households which are levied from their incomes to; build roads, hospitals and give the people a secure place to live in. While the tax collected from firms where firms are encouraged to sell their goods and services in foreign countries where tax collected helps the economy to be stable, give free education, and free medical services. The taxes collected by the government from the households are used in government spending to create an inflow of funds back into the economy. For example, the government may inject some money into the economy by creating jobs through building, subsidies to the company that is undergoing bankruptcy.

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Explanation:

Governments send tax money back to households in the form of transfer payments, interest, and wages. Transfer payments are returned through services like Social Security and Medicare. Wages are paid through the use of tax money to government employees. Governments send money back to firms in the form of subsidies and payments for both financial aid and in return for goods and services.

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