Circular Flow Flashcards
1
Q
What are the 5 participants of the circular flow
A
Households Firms Government Foreign sector Financial institutions
2
Q
What is real flow
A
Good and services flowing from firms to households
Factors of production from households to firms
Public goods from government
3
Q
What is money flow
A
Money flowing between economic participants
Taxes and wages
4
Q
What’s the equation for GDP
A
C + I + G + (X-M)
5
Q
What are injections
A
Any spending not derived from income, into economy
Government spending, exports, investments
6
Q
What are leakages
A
Any flow of money which doesn’t give rise to further round of income from economy
Taxes, savings and imports
