Flow of Funds between Government and Non-Government Sectors (Period 2)

• Period 2: Government runs balanced budget

              Government                      Non-government

        \                    /            \                    /
         \                  /  Spend: 100  \                  /
          \                /   --------->   \                /
           \              /    Tax:   100    \              /
            \            /     <---------     \            /
             \__________/                      \__________/

continued...