Circular flow of income Flashcards
1
Q
What does the circular flow of income show?
A
The movement of money within the economy
2
Q
What do households provide firms with?
A
The factors of production
Consumer expenditure
3
Q
What do firms provide households with?
A
Rewards for the factors of production
Goods and services
4
Q
What are injections?
A
Money going into the economy
5
Q
What are leakages?
A
Money leaving the economy
6
Q
What are the injections in the model?
A
Government spending
Exports
Investment
7
Q
What are the leakages in the model?
A
Savings
Taxes
Imports
8
Q
How can GDP be calculated?
A
The output method
The income
Consumer expenditure
