2.1 Measure of economic performance

Question 1

Define circular flow of income

Answer 1

Model of the economy which shows the movement of goods and services between households and firms and corresponding payment in money terms

Question 2

Give me the 3 injections (money flows in)

Answer 2

Government spending, investments, exports

Question 3

Give me the 3 withdrawals (money flows out)

Answer 3

Savings, imports, taxes

Question 4

Define marginal propensity to consume/tax/save

Answer 4

Additional consumption/saving/taxation from every additional income earnt

Question 5

What is the for marginal propensity to consume/tax/save

Answer 5

change in consumption/saving/taxation
/
change in income

Question 6

Defi