circular flow of income (macro) Flashcards
1
Q
what is the circular flow of income?
A
movement of factor services, products, income, expenditure between households and firms within an economy
2
Q
what do consumers want?
A
cheap prices, high incomes
3
Q
what do firms want?
A
high profit
4
Q
what does the government want?
A
stale economy, maximise social economy
5
Q
what are 3 injections?
A
investment, exports of goods and services, government spending
6
Q
what are 3 leakages/ withdrawals?
A
savings, imports of goods and services, taxation
7
Q
what’s business role in the circular flow?
A
hire land, labour and capital inputs when making products for which they pay rent and wages
8
Q
what is households role?
A
receive income through wages and salary from their jobs and investments and then buy goods and services by firms
