2.4.1 - National Income

Question 1

Define National Income

Answer 1

. the total value a country’s final output of all new goods and services produced

. Same as GDP

Question 2

Define closed and open economy

Answer 2

Closed economy - No foreign trade

Open economy - there is foreign trade

Question 3

Define Circular flow of income model

Answer 3

.a model of the economy showing the flows of goods, services and factors of production.

.The circular flow model demonstrates how money moves from firms to households and back again to firms in an endless loop

Question 4

Difference between wealth and income

Answer 4

1.) Income is a flow of money going to the factors of production , e.g. wages and salaries from jobs, rental income from properties, interest from savings

2.) Wealth is the value of a stock of assets owned , e.g. ownership of property, shares in business, savings in bank account, cars, furniture