4: Circular Fow of Income

Question 1

Elements of Spending?

Answer 1

Consumer spending on domestically produced goods and services

Example;

Total consumer expenditure on all products (C) - Expenditure on imports (M))

Investment Expenditure by firms (I)

E.g. spending on new technology

Government Spending (G)

E.g. building school, NHS

Expenditure by residents abroad on this country’s exports (X)

E.g. People buying UK goods abroad