Circular Flow Of Income

Question 1

What is the circular flow of income

Answer 1

The circular flow of income is an economic model which shows the flow of factors of production form households to firms which the provides goods and services. The circular flow of income shows us how gdp can be measured

Question 2

Draw the circular flow of income

Question 3

What are the rewards for factors of production

Answer 3

• labour = wages
• land = rent
• capital = interest
• entrepreneurship = profit

Question 4

What are injections into the circular flow of income

Answer 4

• INVESTMENT
• GOVERNMENT SPENDING
• EXPORTS

Question 5

What are withdrawals in the circular flow of icons.

Answer 5

• SAVINGS
• TAXATION
• IMPORTS

Question 6

What is an injection in tot he circular flow of income

Answer 6

An injection is a economic variable which adds to the circular flow of income

Question 7

What is a leakage in the circular flow of income

Answer 7

Economic variables which take away money flows from the circular flow of income

Question 8

How does the circular flow of income show economic growth

Answer 8

INJECTIONS > LEAKAGES = ECONOMCI GRIWTH
LEAKAGES> INJECTIONA = FALL IN ECONOMIC GROWTH
INJECTIONS = LEAKAGES = MACROECONOMIC EQULILIBRIUM

Question 9

Hwo can GDP be calculated

Answer 9

• output
• income
• expenditure