2.4 Flashcards
1
Q
What is national income?
A
The monetary value of the flow of goods and services produced during the year.
2
Q
Draw the diagram for the circular flow of income:
A
Leakage; Tax, saving, imports
Firms and Households in the middle
Payment: Gov spending, investment, export.
3
Q
What is the difference between income and wealth? What would the following be? Painting Rent Shares Interest
A
Income is a flow concept and wealth is a stock concept. Wealth Income Wealth Income
4
Q
What is the formula for the multiplier? (Propensity to consume)
A
1/1-MPC
5
Q
What is another formula with withdrawal
A
1//MPW
6
Q
What is the long formula for multiplier?
A
1/MPM+MPS+MPT
