1.1 Circular flow of income Flashcards
1
Q
Define an injection to the circular flow of income
A
where money flows into the circular flow in the form of Investment by firms (I), Government spending (G) and Exports (X)
2
Q
Define a leakage from the circular flow of income
A
where money flows out of the circular flow in the form of Household savings (S), Taxation (T) and Imports (M)
3
Q
Define Gross Domestic Product (GDP)
A
The total value of all goods and services produced in an economy in a given period of time
4
Q
Difference between real and nominal GDP
A
Real GDP is adjusted for inflation, nominal GDP isn’t