Circular Flow Model Flashcards
1
Q
Injections into the circular flow
A
cause an increase in GDP, AD and incomes.
2
Q
Impacts of injections into the circular flow are:
A
Investment increases, Investments in export receipts, increase in consumptions, decrease in income tax, increased government spending.
3
Q
Leakages from the circular flow cause..
A
A decrease in GDP, AD and incomes.
4
Q
Impacts of leakages from the circular flow cause..
A
Decrease in GDP, decrease in AD and decrease in incomes.
Investment decreases, increase in import payments, decrease in consumption, increase in income tax, decreased government spending.
5
Q
GDP = AD =
A
Y = C + I + G + (X - M)