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)

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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)

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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

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4
Q

Difference between real and nominal GDP

A

Real GDP is adjusted for inflation, nominal GDP isn’t

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