Final answer:
Money in the United States is circulated through both daily public and private transfers of funds. These encompass government-related financial activities and private economic transactions. International trade and investments significantly impact these monetary flows, contributing to the overall dynamics of the U.S. economy.
Step-by-step explanation:
The circulatory system for money in the United States comprises both daily public and private transfers of funds, making the correct answer 'c) All of the above.' Public transfers include government spending, taxes, and social welfare programs, while private transfers involve personal transactions, business investments, and financial market activities.
As for why the trade balance and the current account balance track closely together over time, it's because they both reflect international transactions such as exports, imports, and cross-border investment incomes. When the U.S. exports goods to Germany (financial flow into the U.S.), receives returns on past investments in Brazil (financial flow into the U.S.), or when Japanese investors buy U.S. real estate (financial flow into the U.S.), money flows into the American economy. Conversely, when the U.S. imports oil from Russia (financial flow out of the U.S.) or provides foreign aid to Egypt (financial flow out of the U.S.), money flows out of the U.S. economy.
Considering the total amount of U.S. currency in circulation, not all of it is carried by individuals. A significant portion is held outside the U.S., within banks as reserves, or is used in daily transactional circulation within the economy.