Circular Flow

Question 1

What is national output?

Answer 1

The quantity of good and service produced in a goven time eg. finance and food

Question 2

What is national income?

Answer 2

The total amount of money earned with a country.

Payments for the factors of production e.g. Wages

Question 3

What is national expenditure?

Answer 3

The total level of spending on goods and services in a national economy

Question 4

What does the circular flow of income show?

Answer 4

Connections between different sectors of the economy
The flows of goods and services and FoP between firms and households
How national income or GDP is calculated

Question 5

What are the four key components of the circular flow of income?

Answer 5

Households
Businesses
Government
External sector

Question 6

What are injections of the circular flow of income?

Answer 6

Purchases of goods and services

Question 7

What are withdrawals of the circular flow of income?

Answer 7

Savings
Imports
Government spending

Question 8

What is the equation to show the national economny is in balance?

Answer 8

S+T+M=I+G+X