Circular Flow of Income Flashcards
1
Q
Circular Flow of income
A
• Households give FOP
• Firms give income
• Households give expenditure
• Firms provide output
2
Q
Leakages in the economy (3)
A
Savings
Imports
Taxes
3
Q
Injections in the economy (3)
A
Investment
Gov spending
Exports
4
Q
CFOI equilibrium
A
G+X+I = S+M+T
5
Q
CFOI disequilibrium
A
• Injections > leakages : Economic growth
• leakages > injections: Economic decline
6
Q
MEPOs (6)
A
Full employment
Equal distribution of wealth + Income
Environment concerns
Balance of payments
Low and stable inflation
Sustainable economic growth
