2.4.1 + 2.4.2 National income, injections and withdrawals

Question 1

What are the measures of economic activity

Answer 1

National output,
National expenditure,
National income
O=E=Y

Question 2

What is the circular flow of income

Answer 2

Households to Firms
-factor services e.g labour
-expenditure on g/s
Firms to households
-factor incomes e.g wages
-output of g/s

Question 3

What is income

Answer 3

flow of money going into factors of production, wages for labour, rent for landlords, benefits to unemployed, profit for businesses, interest to account holders

Question 4

What is wealth

Answer 4

a large amount of money or valuable possessions, can be held in different ways, e.g savings, bank deposit accounts, property etc

Question 5

What injections into the economy

Answer 5

Increase national income
-Investment
-Gov expenditure
-Exports

Question 6

What are withdrawals into the economy

Answer 6

Spending that leaks out of the circular flow
-Savings
-Imports
-Taxation

Question 7

What is national income equilibrium

Answer 7

economy is in equilibrium when planned withdrawals=injections

Question 8

What is national income

Answer 8

A measure of GDP or GNP

Question 9

Whats the difference between GDP and GNP

Answer 9

GDP- income from UK based factors of production
GNP- income from UK owned factors of production
GNP=GDP+net property income from abroad