1.1 CIRCULAR FLOW Flashcards
1
Q
what are the 3 injections
A
- exports
- government spending
- investment
2
Q
what are the 3 withdrawals
A
- savings
- imports
- tax
3
Q
what does the circular flow of income show?
A
The movement of spending and income throughout the economy
4
Q
What happens if leakages equal Injections
A
Equilibrium
5
Q
What are injections?
A
Money entering the circular flow of income without customer expenditure therefore speeding up the circular flow
6
Q
What are leakages?
A
increases in savings, taxes or imports so reducing the circular flow of income. Money OUT the economy.
7
Q
Explain the circular flow of income
A
Households give factors of production to firms in return firms give goods and services.
Outside- consumer expenditure then goes to firms to buy the factors of production then firms give incomes to households to be spent on goods and services.
