Circular Flow of Income Flashcards
1
Q
Definition:
A
The flow of goods/services and income between producers/firms and households/consumers.
2
Q
Leakages (Income):
A
The outflow from the circular flow of income. Imports, taxation, savings.
3
Q
Injections (Expenditure):
A
When people spend money on goods/services money is put into the economy. Government spending, Exports, Investment. Expenditure of people into the economy.
4
Q
Firms
A
Provide goods/services or consumers, for consumer expenditure.
5
Q
Households
A
Provide factors of production for firms.
6
Q
Growth
A
Leakages < Injections
7
Q
Decrease in Growth
A
Leakages > Injections
8
Q
Factor incomes - Factor services
A
Rent - Land
Wages - Labour
Interest - Capital
Profit - Entrepreneurship
9
Q
Expenditure Method
A
C + I + G + ( X - M )
10
Q
Factor Incomes
A
Returns received on factors of production
